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In  recognition  of  the  very  gratifying  reception  my  effort  to  pre- 
sent the  kiw  of  this  subject  has  met  with  from  the  profession,  I 
have  prepared  a  supplement  to  the  original  work,  covering  the 
later  decisions  to  January  1,  1900,  and  enlarging  upon  some  points 
where  further  study  made  it  seem  to  me  desirable.  This  Supj^le- 
ment  follows  the  chapters  and  sections  of  the  original  work  and 
may  be  referred  to  from  it. 

J.  W.  S. 
Chicago,  May,  I'JOO. 


609779 


LAW    OF    RECEIVERSHIPS. 

suppleme:^t. 

Arranging  the  new  matter  with,  reference  to  tlie  appro- 
priate pages  and  sections  of  the  original  work. 


Page  10,  sec.  5. — Of  the  appointment. 


(a)    DiSCKETIOK  OF  COTJET. 


Appointment  is  in  the  discretion 
of  the  court.  People,  Gore,  v.  Illi- 
nois Bldg.  d  L.  Asso.  56  111.  App.  642 ; 
Crane  v.  McCoy,  1  Bond,  422 ;  Beau- 
mont V.  Beaumont,  166  Pa.  615; 
Farmers'  Loan  &  T.  Co.  v.  Chicago 
&  A.  It.  Co.  27  Fed.  Rep.  14G. 

The  appointment  is  in  the  discre- 
tion of  the  court,  as  to  the  extent 
of  property  over  which  receiver  is  ap- 
pointed. Tressilian  v.  Coniffe,  4  Jr. 
Ch.  Rep.  399. 

If  the  appointment  is  in  the  dis- 
cretion of  court,  and  no  abuse  ap- 
pears, the  appointment  will  not  be 
interfered  with.  Wilcoxon  Mfg.  Co. 
V.  Atkinson,  78  Ga.  338. 

The  discretion  of  the  court  in  ap- 
pointinof  a  receiver  should  not  be  in- 
terfered with,  except  where  the  lower 
court  has  clearly  exceeded  its  juris- 
diction and  there  is  no  other  ade- 
quate remedy.  Ex  parte  Smith,  23 
Ala.  94. 

There  must  be  an  abuse  of  dis- 
cretion in  order  to  secure  a  reversal. 
Sanders  v.  Slaughter,  89  Ga.  34. 

Tlie  court  has  a  broad  discretion 
in    reference    to    the    appointment 


when  executions  are  returned  unsat- 
isfied. Button  v.  Thomas,  97  Mich. 
93 ;  Bagley  v.  Scudder,  66  Mich.  97 ; 
Rankin  v.  Rothschild,  78  Mich.   10. 

In  a  suit  to  set  aside  proceedings 
alleged  to  be  collusive,  wherein  a 
receiver  has  been  appointed,  it  is  dis- 
cretionary to  appoint  a  new  receiver, 
and  not  reviewable.  Connolli/  v. 
Kretz,  78  N.  Y.  620. 

An  application  for  the  appoint- 
ment of  a  receiver  pending  an  appeal 
from  a  decree  of  foreclosure  is  ad- 
dressed to  the  sound  discretion  of 
the  court  in  Nebraska,  and  will  be 
denied  where  it  appears  that  a 
greater  injury  would  ensue  from  the 
appointment  than  from  permitting 
the  possession  of  the  property  to  re- 
main undisturbed.  Provident  Life 
&  T.  Co.  V.  Keniston,  53  Neb.  86. 

Residence  of  defendant. 

A  receiver  of  personal  property 
may  be  appointed  although  the  de- 
fendant resides  in  another  state. 
Hellebush  v.  Blake,  119  Ind.  349. 


Page  12. — (b)     Probability  of  plaintiff''s  eecovery, 


A  receiver  will  not  be  appointed  to 
take  possession  of  property  and 
charge  of  business  in  the  hands  of  a 
defendant,  unless  the  plaintiff's  right 
is  suflicifntly  probaI)le,  or  when  it  is 
not  probable  that  such  property  will 

R.  Supp. 


be  lost  or  will  sustain  injury  during 
tlin  suit  if  it  is  loft  in  defendant's 
hands,  or  that  the  business  will  be 
mismanaged.  Ogdcn  City  v.  Bear 
Lake  d  River  Waterworks  d  Irrig. 
Co.  16  Utah,  440,  41  L.  R.  A.  305. 

1 


§5 


RECEIVERSHIPS— SUPPLEMENT. 


Where,  in  a  petition  for  the  ap- 
pointment of  a  receiver,  tlie  relief 
prayed  for  is  that  eoniphiinant's 
elaini  be  deereed  a  prior  lien  on  all 
the  insolvent's  assets,  and  such  relief 


cannot  be  granted,  a  receiver  should 
not  be  granted.  Hank  of  Florence  v. 
United  atatcs  Sav.  tC-  L.  Co.  104  Ala. 
297. 


Paij,-c  14. — (c)     Necessity  of  preserving  property. 


A  receiver  of  book  accounts  a~s- 
sipned  by  a  debtor  to  one  of  his 
creditors  will  not  be  appointed  pend- 
ing a  suit  by  another  creditor  to 
set  aside  the  assignment  as  fraudu- 
lent, where  the  assignee  has  put  }n 
an  answer  denying  the  allegations  of 
fraud  and  .asserting  his  right  to  the 
security,  and  it  appears  that. he  has 
abundant  means  to  respond  in  any 
amount  for  which  he  may  be  held  lia- 
ble. Wacbcr  v.  Rosenstcin,  G  App. 
Div.  447. 

A  receiver  should  never  be  appoint- 
ed over  a  mortgagee  of  chattels  in 
possession,  where  there  is  a  balance 
due  him.  Bayaud  v.  Fellows,  28 
Barb.  451. 

In  the  absence  of  fraud,  and  where 
a  corporation  has  parted  with  all  its 
property  and  used  the  same  in  pay- 
ment of  debts,  a  receiver  will  not  be 
appointed.  Halc-Bcrry  Co.  v.  Dia- 
mond State  Iron  Co.  04  Ga.  61. 

And  where  rents  are  applied  to  the 
payment  of  the  mortgage  debt  and 
necessary  expenses  in  the  manage- 
ment and  care  of  the  property,  a  re- 
ceiver will  not  be  appointed.  Myton 
V.  Daren  port,  'A  Iowa,  .583. 

Receiver  not  appointed  where  ad- 
ministrator has  power  to  protect 
property.  Veret  v.  Duprez,  L.  R.  6 
Eq.  329. 

An  order  appointing  a  receiver 
pendente  lite,  in  a  proceeding  under 
3  How.  (Mich.)  Ann.  Stat.  §  87490, 
providing  for  the  appointment  of  a 
receiver  at  tlie  instance  of  persons 
having  preferred  claims  under  a  vol- 
untary assignment,  is  improvident,  if 
not  an  absolute  nullity.  Hall  v. 
Wayne  Circuit  Judge,  111  Mich.  39.5. 

Because  the  husband  of  an  execu- 
trix was  in  the  West  Indies,  and  not 
amenable  to  the  process  of  court  in 
case  his  wife  as  executrix  should 
commit  waste  or  refuse  to  pay,  a  re- 
ceiver was  appointed.  Decided  by 
9 


the  Lord    Cliancellor   of   England  in 
1741.     Taylor  v.  Allen,  2  Atk.  213. 

Notice   of    application   for    appoint- 
ment. 

As  a  general  rule,  notice  of  the  ap- 
plication for  the  appointment  of  a 
receiver  must  be  given.  Mcstier  v. 
A.  Chcvallier  I'avcnient  Co.  .51  La. 
Ann.  142;  Schone  v.  Consolidated 
Bldg.  d  8av.  Co.  4  Ohio  N.  P.  210; 
titration  v.  Davidson,  1  Russ.  &  M. 
484  ;  Grace  v.  Curtiss,  3  Misc.  558 ; 
FAwood  V.  First  Nat.  Bank,  41  Kan. 
475;  Thompson  v.  Tower  Mfg.  Co. 
87  Ala.  733;  People,  Port  Huron  d 
O.  R.  Co.  v.  St.  Clair  Circuit  Judge, 
31  Mich.  45G;  Todd  v.  Crooke,  4 
Sandf.  C94;  Cincinnati,  77.  <€•  D.  R. 
Co.  V.  Jcwctt,  37  Ohio  St.  049;  Gil- 
bert V.  Block,  51  111.  App.  510;  Mor- 
gan V.  Von  Kohnstamm,  9  Daly,  355, 
"OO  How.  Pr.  101. 

And  so  with  regard  to  an  appli- 
cation to  extend  the  receivership. 
Le  Grand  v.  O'Neill,  2  Ir.  Ch.  Rep. 
509;  State,  Thjrnton-Thomas  Mer- 
cantile Co.  v.  Second  Judicial  Dist. 
Ct.  20  :\Iont.  284;  Sandf ord  v.  Sin- 
clair, 8  Paige,  373. 

In  the  absence  of  a  statute  the  ap- 
pointment of  a  receiver  ex  parte  is 
void,  and  can  be  assailed  collaterally. 
'Whitney  v.  Hanoi:er  Nat.  Bank,  71 
Miss.  1009,  23  L.  R.  A.  531. 

Not  required  if  defendant  cannot 
be  found  and  his  counsel  refuses  to 
disclose  his  whereabouts.  Hopper 
v.  Davies,  70  111.  App.  082;  St. 
Louis,  K.  cC-  S.  R.  Co.  v.  Wear,  135 
Mo.  230,  33  L.  R.  A.  341 ;  Hangan  v. 
Netland,  51  Minn.  552;  Hendrix  v. 
Amcrcian  Freehold  Land  Mortg.  Co. 
95  Ala.  313. 

Insolvency  of  the  debtor  alone  is 
not  sulficient  ground  for  dispensing 
with  notice.  Smith  Dimick  Lumber 
Co.  v.  Teaguc  (Ala.)   24  So.  4. 

There  must  be  an  emergent  neces- 


GENERAL  NATURE  AND  FEATURES  OF  THE  LAW. 


§7 


sity  for  the  immediate  appointment. 
Webb  V.  Allen,  15  Tex.  Civ.  App.  605. 

And  the  emergency  must  be  shown 
by  allegations.  Jacksonville  Ferry 
Co.  V.  Stockton  (Fla.)   23  So.  557.  _ 

And  the  allegations  must  be  posi- 
tive, and  the  excuse  for  not  giving 
notice  must  not  be  alleged  as  a  mere 
conclusion  or  on  belief,  but  the  facts 
justifying  such  belief  or  establishing 
such  conclusion  must  be  stated.  Ibid. 

Appointment  ex  parte  may  be 
made  in  aid  of  the  jurisdiction  of  the 
court,  or  as  a  consei'vatory  process 
incident  to  the  principal  demand.  Re 
Moss  Cigar  Co.  50  La.  Ann.  789. 

There  must  be  an  obvious  necessity 
for  prompt  action.  Bristow  v.  Home 
Bldg.  Co.  91  Va.  18. 

Or  extreme  danger  apparent. 
Fredenheim  v.  Rohr,  87  Va.  764. 

Or  danger  of  irreparable  loss.  Cin- 
cinnati,  H.  &  D.  R.  Co.  v.  Jeioett,  37 
Ohio  St.  649. 

Affidavits  in  support  of  the  motion 
should  also  be  served.  Brundage  v. 
Home  Sav.  &  L.  Asso.  11  Wash.  277. 

The  statute  frequently  regulates 
the  matter  of  notice  in  the  appoint- 
ment of  receivers.  Allen  v.  Cooley, 
53  S.  C.  414. 

Under  Mo.  Laws  1895,  p.  91, 
amending  Mo.  Rev.  Stat.  1889,  § 
2246,  the  power  of  the  court  to  ap- 
point a  receiver  on  an  ex  parte  ap- 
plication without  notice  should  not 
extend  beyond  such  time  as  is  rea- 
sonably required  to  allow  the  de- 
fendant to  show  cause  against  the 
continuance  of  the  receivership.  St. 
Louis,  K.  &  S.  R.  Co.  v.  Wear,  135 
Mo.  230,  33  L.  R.  A.  341. 


At  the  next  term,  three  months 
distant,  is  too  long.  Whitney  v. 
Welch,  2  Abb.  N.  C.  442;  Stohn  v. 
Epstein,  6  N.  Y.  Civ.  Proe.  Rep.  36, 
14  Abb.  N.  C.  322. 

In  a  proceeding  under  §  298,  Code 
of  New  York,  if  the  debtor  has  ab- 
sconded so  that  notice  cannot  be 
served  on  him  the  remedy  is  by  credi- 
tors' bill,  and  not  supplementary 
proceeding.  Kemp  v.  Harding,  4 
How.  Pr.  178. 

To  authorize  the  appointment  un- 
der §  298,  Code  of  New  York,  notice 
to  the  debtor  must  be  given.     Ibid. 

Construction  of  N.  Y.  Laws  1883, 
chap.  378,  §  8,  relative  to  copy  of  mo- 
tions, etc.,  and  service  on  attorney 
general.  Grcason  v.  Ooodwillie- 
Wyman  Co.  38  Hun,  138. 

Notice   of   application  for   removal. 

The  court  may  dismiss  a  suit 
against  a  corporation,  and  discharge 
a  temporary  receiver  appointed 
therein,  without  any  notice  to  the 
general  creditors.  Rockwell  v.  Port- 
land Sav.  Bank,  31  Or.  431;  Re  Pre- 
mier Cycle  Mfg.  Co.  70  Conn.  473 ; 
Neiv  York  &  W .  JJ .  Teleg.  Co.  v.  Jew- 
ett,  115  N.  Y.  166. 

Failure  to  direct  notice  to  be  given 
to  the  parties  to  an  action  for  the  re- 
moval of  a  receiver  is  not  ground  for 
reversal,  where  they  in  fact  received 
actual  notice  before  the  hearing,  and 
interposed  no  objection  for  want  of 
formal  service,  and  do  not  appeal. 
Re  Premier  Cycle  Mfg.  Co.  70  Conn. 
473;  Atty.  Gen.  v.  Haberdasher's  Co. 
2  Jur.  915. 


Page  23,  sec.  7. — Effect  of  appointment. 


(a)   Places  peoperty  in  custodia  legis. 


Property  belonging  to  one  not  a 
party  to  an  action  in  which  a  re- 
ceiver has  been  appointed,  and  for 
which  a  receiver  has  not  been  asked, 
is  not  in  custodia  Icgis,  so  as  to  pre- 
clude its  seizure  under  legal  process, 
although    the    receiver    has    wrong- 


fully taken  possession  thereof. 
Farmers'  &  M.  Nat.  Bank  v.  Scott 
(Tex.  Civ.  App.)  45  S.  W.  26. 

Property  in  hands  of  receiver  is 
in  cuslodia  Icgis,  and  not  subject  to 
attachment.  Texas  Trunk  R.  Co.  v. 
Lewis,  81  Tex.  1. 

8 


§  8 


RECEIVERSHIPS— SUPPLEMENT. 


A  rereivcr's  custody  is  that  of  the       Tremper,  v.  Brooks,  40  Mich.  333,  29 
court  which  appointed  him.     People,       Am.   Rep.  534. 

Page  25,  sec.  8. — Kinds  of  receivers. 


Ancillary     receivers. 

A  court  of  the  state  in  which  a 
corj>oration  was  orj^anizcd  may  ap- 
point a  receiver  of  its  property,  not- 
withstivnding  that  all  its  property, 
both  real  and  personal,  is  situated  in 
another  state;  and  the  courts  of  the 
latter  stat«  may  properly,  under  the 
rules  of  comity,  appoint  the  same 
person  as  ancillary  receiver.  Bayne 
V.  Brewer  Pottery  Co.  82  Fed.  Rep. 
391. 

A  receiver  will  not  be  appointed 
by  a  court  of  insolvency,  where  the 
principal  relief  sought  is  injunction 
and  other  equitable  relief,  and  the 
appointment  of  a  receiver  is  ancil- 
lary thereto.  Rehn  v.  North  Fair- 
mount  B.  d  S.  Co.  5  Ohio  N.  P.  314. 

A  court  appointing  ancillary  re- 
ceivers of  a  foreign  corporation  to 
collect  assets  within  its  jurisdiction 
will  not  refuse  to  transmit  the  fund 
to  the  original  receivers,  in  favor  of 
domestic  creditors,  unless  they  have 
acquired  some  priority  of  lien  on  the 
corporate  assets.  New  York  Insu- 
lated Wire  Co.  v.  Greeley,  59  U.  S. 
App.  GIO;  /Sands  v.  E.  8.  Greclei/  & 
Co.  88  Fed.  Rep.  130,  31  C.  C.  A.  424. 

A  United  States  circuit  court 
which  has  appointed  an  ancillary  re- 
ceiver for  a  foreign  corporation  has 
jurisdiction  of  a  suit  by  him  against 
citizens  of  the  same  state  in  which 
he  lived  to  collect  subscriptions  to  the 
corporation,  the  claims  for  which 
have  been  transmitted  to  him  by  the 
principal  receiver  appointed  at  the 
domicil  of  the  corporation  in  an- 
other state.  Sullivan  v.  Sheehan, 
89  Fed.  Rep.  247. 

An  ancillary  receiver  of  a  foreign 
corporation,  who,  bj'  the  order  of  his 
appointment,  is  vested  with  the 
usual  powers  and  duties  of  receivers, 
is  authorized  to  make  an  accord  and 
satisfaction  of  a  claim.  Goodrich 
v.  Sanderson,  35  App.  Div.  54(!. 

An  ancillary  receiver  of  a  railroad 
cannot  be  sued  in  the  jurisdiction  of 


his  appointment  for  a  tort  committed 
in  the  jurisdiction  of  the  appoint- 
ment of  the  principal  receiver,  al- 
though the  principal  and  ancillary 
receivers  are  the  same  persons. 
Union  Trust  Co.  v.  Atchison,  T.  d 
S.  F.  R.  Co.  87  Fed.  Rep.  530. 

It  has  been  held  in  New  York  that 
on  the  application  of  a  foreign  re- 
ceiver an  ancillary  receiver  will  not 
be  appointed  in  that  state,  where 
the  foreign  receiver  has  apparently 
all  the  power  requisite.  Mahon  v. 
Onglcy  Electric  Co.  156  N.  Y.  19G. 

An  ancillary  decree  appointing  re- 
ceivers will  not  be  in  eftect  so  modi- 
fied as  to  except  a  portion  of  the 
property  in  the  district,  where  the 
original  appointment  includes  all 
the  property  of  the  company.  Mer- 
cantile Trust  Co.  V.  Baltimore  &  0. 
R.  Co.  79  Fed.  Rep.  389. 

A  motion  to  allow  an  ancillary  re- 
ceiver of  an  insolvent  corporation  to 
pay  over  the  funds  to  the  court  of 
primary  jurisdiction  was  held  under 
advisement  upon  opposition  by  resi- 
dent creditors,  where  it  appeared 
that  they  did  not  thoroughly  under- 
stand the  situation,  and  erroneously 
supposed  if  the  fund  was  not  trans- 
ferred their  claims  would  be  forth- 
with paid  in  full,  but  in  fact  con- 
tinued litigation  would  result,  and 
the  fund  would  probably  not  be  dis- 
tributed for  years.  Sands  v.  E.  S. 
Greeley  d  Co.  83  Fed.  Rep.  772. 

Receivers  pendente  lite. 

The  court  has  authority,  in  a 
proper  case,  to  appoint  a  receiver  to 
hold  property  pending  litigation  in 
the  same  court,  in  which  case  he  is  a 
receiver  pendente  lite.  Tregaskis  v. 
Detroit  Super.  Ct.  Judge,  47  Mich. 
509. 

A  receiver  may  properly  be  ap- 
pointed, under  the  Texas  statute,  to 
take  charge  of  property  pending  a 
litigation  in  regard  thereto.  Lynn 
V.  First  Nat.  Bank,  40  S.  W.  228. 

But  where  the  statute  provides  for 


GENERAL  NATURE  AND  FEATURES  OF  THE  LAW. 


§9 


the  appointment  of  a  receiver  lie  is      v.  Globe  Mut.  L.  Ins.  Co.  57  How.  Pr. 
not  a  receiver  pendente  lite.     People       481. 


Page  26,  sec.  9. — At  what  stage  appointed. 


Under  N.  Y.  Code,  §  294,  a  receiver 
will  not  be  appointed  before  execu- 
tion returned  unsatisfied.  Darrow 
V.  Lee,  16  Abb.  Pr.  215. 

If  the  record  shows  the  receiver 
was  appointed  on  the  same  day  the 
action  was  commenced,  the  pre- 
sumption is  that  each  was  done  in 
the  proper  order.  Elwood  v.  First 
2^at.  Bank,  41  Kan.  475. 

May  be  by  statute  in  vacation  or  at 
chambers. 

Under  Mo.  Rev.  Stat.  1889,  § 
2193,  a  receiver  may  be  appointed  in 
vacation,  in  any  county  within  the 
circuit,  no  matter  where  the  case  is 
pending.  St.  Louis,  K.  <&  S.  R.  Co. 
V.  Wear,  135  Mo.  268,  33  L.  R.  A. 
341. 

Under  W.  Va.  Acts  1882,  chap.  78, 
§  28  (Worth's  Code,  p.  743),  a  judge 
has  no  right  to  appoint  a  receiver  of 
real  estate,  rents,  etc.,  in  vacation. 
Kerr  v.  Hill,  27  W.  Va.  576. 

The  appointment  of  a  receiver  in 
vacation  is  void  unless  there  is  statu- 
tory power  to  appoint.  Guy  v. 
Doalc,  47  Kan.  236. 

Under  the  California  insolvency 
act  of  1880  a  receiver  may  be  ap- 
pointed by  a  judge  in  chambers  upon 
ex  parte  application.  Real  Estate 
Asso.  V.  San  Francisco  City  &  County 
Super.  Ct.  60  Cal.  223. 

Appointed    before    service,    when. 

In  Tanfield  v.  Irvine,  2  Russ.  Ch. 
149,  a  receiver  was  appointed  before 
.service,  where  the  defendant  was  out 
of  the  jurisdiction.  Macintosh  v. 
Great  Western  R.  Co.  18  L.  J.  Ch.  N, 
S.  169. 

A  receiver  was  denied  where  the 
defendant  was  alleged  to  hold  ad- 
versely to  the  plaintiff,  and  was  not 
served  with  process,  tlyslop  v.  Hop- 
pock,  5  Ben.  447. 

Under  a  bill  properly  verified,  an 


order  appointing  a  receiver  before 
appearance  and  before  service  of  pro- 
cess cannot  be  disturbed.  Sieg- 
mund  V.  Ascher,  37  111.  App.  122; 
Gage  v.  Smith,  79  111.  219. 

Before  answer. 

Where  the  application  for  a  receiver 
is  made  before  the  defendant  has  filed 
his  answer  the  defendant  has  a  right 
to  be  heard  upon  affidavit  as  to  his 
defense.  Whitehouse  v.  Point  De- 
fiance, T.  &  E.  R.  Co.  9  Wash.  558. 

A  receiver  has  been  refused  before 
answer  where  the  party  applying 
could  not  make  out  an  equitable  title. 
Metcalfe  v.  Pulvertoft,  1  Ves.  &  B. 
180. 

A  motion  for  receiver  before  an- 
swer is  unusual,  but  has  been  granted 
where  defendant  filed  affidavit,  in  a 
strong  case  of  waste.  Jervis  v. 
White,  6  Ves.  Jr.  738;  Middleton  v. 
Dodswell,  13  Ves.  Jr.  266;  Hugonin 
V.  Basely,  13  Ves.  Jr.  105;  Metcalfe 
V.  Pulvertoft,  1  Ves.  &  B.  180 ;  Duck- 
worth  V.  Trafford,  18  Ves.  Jr.  283; 
Van7i  V.  Barnett,  2  Bro.  Ch.  158; 
Compton  V.  Bearcroft,  Trin.  1773, 
cited^  in  2  Bro.  Ch.  158. 

It  is  the  common  practice  to  grant 
a  receiver  before  answer  where  fraud 
is  clearly  proved  by  affidavit,  or 
where  it  is  shown  that  imminent 
danger  will  ensue  unless  the  prop- 
erty is  taken  under  the  care  of  the 
court.  Hugonin  v.  Basely,  13  Ves. 
Jr.  105;  Middleton  v.  Dodswell,  13 
Ves.  Jr.  266;  Lloyd  v.  Passingham, 
16  Ves.  Jr.  5^;  Duckworth  v.  Traf- 
ford, 18  Ves.  Jr.  283;  Scott  v.  Bech- 
er,  4  Price,  346. 

And  so,  where  the  plaintiff  states 
a  clear  equitable  title.  Metcalfe  v. 
Pulvertoft,  1  Ves.  &  B.  180;  Jervis 
v.  White,  6  Ves.  Jr.  738 ;  Dawson  v. 
Yates,  1  Beav.  301 ;  Williamson  v. 
Wilson,  1  Bland,  Ch.  422;  Blood- 
good  V.  Clark,  4  Paige,  577;  Micou 
v.  Moses,  72  Ala.  439;  Probasco  v. 
Probasco,  30  N.  J.  Eq.  108. 


§  10 


RECElVERSniPS— SUPPLEMENT. 


A  receiver  will  not  be  appointed 
before  answer  unless  in  case  of  im- 
pending mischief  irreparable  in  case 
of  delay.  Oydcn  v.  Kip,  6  Johns. 
Cl».  lUU;  Wooilijatt  V.  (Jrcslcy,  S  Sim. 
180. 

Pending  return  of  inquisition. 

A  receiver  of  a  lunatic's  estate 
may  be  ajipointed  pending  the  return 
of  the  inquisition.  Ke  Kenton,  5 
Binn.  G13. 

Pending  judgment  on  motion  for  new 
trial. 

After  judgment  and  before  the  mo- 
tion for  a  new  trial  the  court  may 
appoint  a  receiver  if  the  defendant  is 
insolvent  and  is  in  receipt  of  large 
suras  of  money  from  the  premises. 
^Vhitnell  V.  Buckman,  2U  Cal.  447; 
Bainbrigge  v.  Bainbrigge,  3  Eng.  L. 
&  Eq.  80. 

Pending  a  plea  to  an  amended  bill. 

The  pendency  of  a  plea  to  an 
amended  bill  does  not  prevent  the 
hearing  of  a  motion  for  a  receiver, 
where  the  original  bill  is  answered. 
Thompson  v.  Helby,  12  Sim.  100. 

On  hearing. 

The  appointment  may  be  made  on 
hearing.  Shee  v.  Harris,  1  Jones  & 
L.  91. 


At  any  time. 

Receiver  may  be  appointed  at  any 
time  when  proceedings  are  pending. 
People,  Fiieh,  v.  Mead,  29  How.  Pr. 
3U0. 

After  appeal. 

Notwithstanding  an  appeal  the 
court  may  appoint  a  receiver  of  the 
rents  and  prolits.  Hut  ton  v.  Loch- 
ridge,  27  \V.  Va.  428. 

And  even  after  appeal  perfected. 
Chicago  d  S.  E.  R.  Co.  v.  St.  Clair, 
144  Ind.  371;  Brinkman  v.  Ritzin- 
ger,  82  Ind.  358. 

To  deprive  the  trial  court  of  juris- 
diction to  appoint  a  receiver  upon 
the  ground  that  an  appeal  is  pend- 
ing, if  the  pendency  of  an  appeal  de- 
feats its  jurisdiction,  it  must  clearly 
appear  that  the  case  is  jiending  in 
an  appellate  court  that  has  juris- 
diction thereof.  Stone  v.  Stone 
(Tex.  Civ.  App.)  43  S.  W.  507. 

A  judgment  of  atlirmance  by  an  ap- 
pellate court  after  a  receiver  has 
been  apjwinted  for  appellant,  with- 
out substituting  the  receiver  as  ap- 
pellant, is  valid  and  binding  where 
the  judgment  allirmed  was  rendered 
before  the  receiver  was  appointed. 
Steinhauer  v.  Colmar,  11  Colo,  App. 
494. 


Page  27,  sec.  10. — Application  for;  allegations;  who  appointed. 


Notice  of. 
If  the  purpose  is  stated  in  the  no- 
tice for  application,  the  specific 
grounds  of  the  application  need  not 
be  stated.  Columbia  Finance  &  T. 
Co.  v.  Morgan,  19  Ky.  L.  Rep.  1701, 
Modified  on  Rehearing  in  19  Ky.  L. 
Rep.  17G5,  which  has  Rehearing  De- 
nied in  19  Ky.  L..  Rep.  1765. 

In  what  action. 
Ind.  Code,  §  1222,  authorizes  the 


appointment  of  a  receiver,  without 
regard  to  the  form  of  action,  when- 
ever justice  requires  it.  Hcllebush 
V.  Blake,  119  Ind.  349. 

Under  the  judicature  act  of  1873, 
in  England  the  appointment  of  a  re- 
ceiver may  be  made  in  the  original 
action,  and  a  bill  in  chancery  after 
judgment  is  no  longer  required, 
though  such  practice  would  be  prop- 
er. Smith  V.  Coicell,  L.  R.  6  Q.  B. 
Div.  75. 


Page  27.— (a) 

The  court,  at  the  instance  of  one 
to  whom  a  married  woman  has  been 
ordered  to  pay,  out  of  her  separate 
6 


By   whom    ]M.iDE. 

estate  only,  certain  costs  of  a  maxi- 
mum amount,  which  have  not  yet 
been  taxed,  may  appoint  a  receiver 


GENERAL  NATURE  AND  FEATURES  OF  THE  LAW. 


10 


of  her  interest  (not  exceeding  the 
maximum)  in  an  estate,  as  security 
for  the  costs,  where  she  has  no  other 
separate  property  out  of  which  they 
can  be  paid.  Cuin)nins  v.  Perkins 
(C.  A.)  [1S99]  1  Ch.  16,  68  L.  J.  Ch. 
N.  S.  57. 

Receiver  may  be  appointed  on  the 
application  of  the  state.  Where  a 
lien  on  the  rents  is  not  given,  and  the 
security  is  not  ample,  and  the  mort- 
gagor is  insolvent,  a  receiver  will  be 
appointed.  State  v.  Northern  C.  R. 
Co.  IS  Md.  193;  Columbian  Athletic 
Club  V.  State,  McMahon,  143  Ind.  98, 
28  L.  R.  A.  727. 

A  receiver  will  not  be  appointed 
at  the  instance  of  an  insolvent  cor- 
poration. Hugh  V.  McRae,  Chase 
Dec.  466. 

A  receiver  will  not  be  appointed 
on  the  application  of  a  cestui  que 
trust  who  has  but  a  small  interest 
in  the  matter  of  profits  growing  out 
of  a  contract.  Webb  v.  Van  Zandt 
( 1863)  16  Abb.  Pr.  314,  note. 

An  application  for  the  appoint- 
ment of  a  receiver,  although  based 
upon  concurrent  demands  of  the 
parties,  cannot  be  granted  under  N. 
Y.  Code  Civ.  Proc.  §  713,  subd.  1, 
permitting  a  receiver  before  judg- 
ment, on  the  application  of  a  party 
who  establishes  an  apparent  right  to 
property  in  possession  of  the  adverse 
party,  where  there  is  danger  of  its 
being  lost.  Dusenbury  v.  Dusen- 
burij,  11  Daly,  112. 

A  creditor  may  apply,  notwith- 
standing N.  C.  Acts  1891,  chap.  155, 
and  N.  C.  Acts  1893,  chap.  478. 
North  V.  Piedmont  Bank.  121  N.  C. 
343. 

Defendants  may  apply  by  a  cross 
bill.  Russell  V.  Mohrweil  Lumber 
Co.  102  Ga.  593. 

A  creditor  or  subsequent  encum- 
brancer has  no  right  to  a  receiver  as 
against  a  mortgagee  in  possession. 
McConnell  v.  Denham,  72  Iowa,  494. 

The  United  States  may,  for  the 
protection  or  reclamation  of  public 
lands,  pursue  the  same  equitable 
remedies,  including  the  appointment 
of  a  receiver,  that  an  individual  un- 
der like  circumstances  may  pursue  in 
reference  to  his  own  lanrls,  and  is  en- 
titled to  the  same  measure  of  relief 


which  would  be  extended  to  him. 
Steele  v.  Walker,  115  Ala.  485. 

If  made  by  creditors  they  must 
have  judgment.  Brabrook  Tailoring 
Co.  V.  Belding  Bros.  40  111.  App.  326. 

A  receiver  will  not  be  appointed  on 
the  application  of  a  general  creditor. 
Cahn  V.  Johnson,  12  Tex.  Civ.  App. 
304. 

A  receiver  will  be  appointed  in  a 
creditors'  action  where  the  property 
sought  to  be  subjected  to  the  pay- 
ment of  the  judgment  is  merchandise 
in  the  possession  of  the  insolvent 
debtor,  who  has  mortgaged  it,  but 
reserved  from  the  sale  sufficient  to 
defray  the  running  expenses  of  the 
business,  to  replenish  stock,  to  sup- 
port his  family,  and  to  compensate 
himself.  Hirsch  v.  Isreal,  106  Iowa, 
498. 

A  receiver  of  a  corporation  may 
be  appointed  in  a  proceeding  insti- 
tuted by  a  simple-contract  creditor, 
under  111.  Rev.  Stat.  chap.  32,  §  25, 
although  the  debt  is  not  due.  J.  V. 
Northam  d  Co.  v.  Atherton,  67  111. 
App.  230. 

Objection  to  application. 

It  is  no  objection  to  a  motion  to 
appoint,  that  answer  under  oath  is 
waived.  Root  v.  Safford,  2  Barb. 
Ch.  33. 

The  proper  time  for  presenting 
reasons  why  a  receiver  should  not  be 
appointed  is  when  the  application 
for  his  appointment  is  made.  Mer- 
chants' Nat.  Bank  v.  Braithicaite,  7 
N.  D.  358. 

A  sheriff  who  levies  an  attachment 
has  no  right  to  object  to  an  order  ap- 
pointing a  receiver  of  the  property 
of  the  attachment  defendant,  where 
the  attachment  plaintiffs  consent 
thereto.  Pease  v.  F.  S.  Waters  & 
Co.  60  111.  App.  359. 

Bringing  fund  into  court. 

If  money  in  dispute  is  brought  into 
court  a  receiver  will  not  be  ap- 
pointed. Curling  v.  Toionshend,  19 
Ves.  Jr.  028. 

Nor  where  security  is  given  by  de- 
fendants to  satisfy  any  judgment 
which  may  be  rendered  against 
them.     Conquest  v.   National  Bank, 

7 


10 


RECEIVERSHIPS— SUPPLEMENT. 


97   Ga.    500;    Ilaigh  v.    arattan,    1 
Beav.  201. 

Application  may    he    renewed  when. 

The  denial  of  an  application  for 
appointment  of  a  receiver  does  not 
prevent  a  second  application  on  the 
same  ground  as  the  first,  but  on  a 
diU'erent  sUite  of  facts.  Columbia 
Finance  tf-  T.  Co.  v.  Morgan.  19  Ky. 
L.  Rep.  17(il,  Modified  on  Rehearing 
in  10  Ky.  L.  Rep.  ITtio,  Which  has 
Rehearing  Denied  in  19  Kj'.  L.  Rep. 
17(>5;  Atty.  Gen.  v.  Ualicay,  1 
Molloy,  95;  Allen  v.  Harris,  4  Lea, 
190. 

The  continuance  of  an  application 
for  a  receiver,  made  in  vacation,  is 
no  bar  to  an  application  in  term 
time.  McCaskill  v.  Warreti,  58  Ga. 
2S(>. 

The  motion  for  appointment  may 
be  denied  with  leave  to  renew,  if  it 
does  not  distinctly  appear  that  the 
judgment  and  execution  were  regu- 
lar. Bank  of  Woosicr  v.  Spencer, 
Clarke  Ch.  386. 

A  receiver  of  a  corporation  will 
not  be  appointed  on  a  second  appli- 
cation on  proof  concerning  its  in- 
solvency, which  might  have  been  of- 
fered on  the  previous  application. 
Ft.  W'atinc  Electric  Corp.  v.  Frank- 
lin Electric  Light  Co.  (N.  J.  Eq.)  41 
Atl.  217. 


An  application  for  appointment  in 
a  suit  that  has  been  dismissed  is  not 
a  bar  to  a  second  application  in  an- 
other suit  subsequently  brought. 
Anderson  v.  Powell,  44  Iowa,  20. 

Affidavits  in  support  of  application. 

Affidavits  may  accompany  the  pe- 
tition for  tiie  appointment  of  a  re- 
ceiver, under  Tex.  Rev.  Stat.  1895, 
art.  14U5,  and  may  be  read  in  sup- 
port of  its  allegations,  but  they  can- 
not serve  as  pleadings  in  the  case,  or 
enlarge  upon  the  case  made  by  the 
petition.  Webb  v.  Allen,  15  Tex. 
Civ.  App.  G05;  Bell  v.  M'Loghin, 
Flan.  &  K.  272. 

Upon  the  hearing  of  a  motion  for 
the  appointment  of  a  receiver,  affida- 
vits are  properly  stricken  out  as 
irrelevant,  when  they  are  not  perti- 
nent to  the  issue  presented,  but  relate 
to  an  issue  already  decided.  Allen 
v.  Cooley,  53  S.  C.  414. 

Prayer  for. 

A  receiver  will  not  be  appointed  if 
not  praj'ed  for.  Barloic  v.  Gains,  8 
Beav.  329. 

Absence  of  legal  remedy. 

It  should  appear  at  the  making  of 
the  application  that  no  adequate 
legal  remedy  exists.  Congden  v. 
Lee,  3  Edw.  Ch.  304. 


Page  28. — (c)     Allegations  ;  averments. 


The  averment  in  a  complaint  in 
an  action  to  set  aside  a  trust  deed 
executed  by  a  corporation,  that  the 
property  would  not  bring  in  the  open 
market  more  than  a  specified 
amount,  which  is  less  than  the 
amount  of  the  debt  secured,  unless 
an  exceptional  purchaser  should  be 


found,  is  not  conclusive  against  the 
plaintiff  upon  the  application  for 
the  appointment  of  a  receiver  to  take 
charge  of  the  property  pending  the 
action,  that  he  would  have  no  inter- 
est therein  if  the  trust  deed  should  be 
held  good.  Goshen  Woolen  Mills  Co. 
v.  City  'Nat.  Bank,  150  Ind.  279. 


Page  28. — (c)  6.     Laches  in  making  application. 


After  forty  years'  undisturbed 
possession,  the  court  will  not  ap- 
point. G^ray  v.  Chaplin,  2  Russ.  Ch. 
126. 

Reference  of,  to  master. 

On  reference  to  a  master  on  an  ap- 
plication for  a  receiver,  the  only 
8 


question  for  examination  is  the  re- 
ceivership question.  Copous  v. 
Kauffman,  8  Paige,  583. 

For  ichom  appointed. 

A  receiver,   while  the  instrument 
of  the  court  for  the  conservation  of 


MATTERS  RELATING  TO   THE  APPOINTJMENT. 


S  U 


the  estate,  in  a  sense  represents  all 
parties  in  interest,  and  it  is  his 
duty  and  right  to  defend  it  against 
all  claims  which  he  deems  unjust. 
Bosicorth  V.  Terminal  R.  Asso.  53  U. 
S.  App.  302,  SO  Fed.  Rep.  909,  26  C. 
C.  A.  279. 

A  receiver  is  appointed  not  only 
for  plaintiff,  but  also  for  the  benefit 
of  all  persons  who  may  establish 
rights  in  the  case.  First  ^^at.  Bank 
V.  Barnum  Wire  <&  Iron  Works,  60 
Mich.  487. 

A  receiver  appointed  under  the  act 
of  Congress  of  March  3,  1887,  repre- 
sents not  only  the  corporation,  but 
also  the  government  and  all  who 
have  interests  in  the  property. 
United  States  v.  Church  of  Jesus 
Christ  of  L.  D.  8.  5  Utah,  538. 

The  receiver  of  an  insolvent  life  in- 
surance company  is  the  trustee  of 
and  represents  the  creditors  and  all 
interested  in  the  fund,  including  pol- 
icy holders,  and  is  not  the  represen- 
tative of  the  latter  to  the  exclusion 
of  the  corporation.  Mason  v.  Henry, 
152  X.  Y.  529. 

Ordinarily  the  receiver  is  the 
agent  of  the  mortgagor,  but  not  so 
where  other  trusts  are  involved.  Jef- 
freys V.  Dickson,  L.  R.  1  Ch.  183. 

A  receiA'er  is  not  the  representa- 
tive of  the  owner  in  regard  to  the 
fulfilment  of  his  contracts,  except 
such  as  he  adopts.  Brown  v.  War- 
ren, 78  Tex.  543,  11  L.  R.  A.  394. 

Must  he  assets. 

A  receiver  will  not  be  appointed 
where  the  existing  mortgages  will 
consume  all  the  property.  Collins 
V.  Myers,  68  Ga.  530. 

Where  there  are  no  assets  of  a 
building  and  loan  association  for  dis- 
tribution; a  receiver  will  not  be  ap- 
pointed. Barton  v.  Enterprise  Loan 
&  Bldg.  Asso.  114  Ind.  220. 

Where  it  appears  that  a  receiver 
will  be  useless  the  court  will  not  ap- 


point. Mercantile  Invest.  &  G. 
Trust  Co.  V.  River  Platte  Trust,  L. 
&  A.  Co.  [1892]  2  Ch.  303;  Barton  v. 
Enterprise  Loan  &  Bldg.  Asso.  114 
Ind.  226. 

A  receiver  will  not  be  appointed 
after  judgment  debtor  has  become  a 
bankrupt.  Ryan  v.  Lefroy,  3  Ir.  Ch. 
Rep.  351. 

When  title  in  dispute. 

The  court  is  slow  to  appoint  a  re- 
ceiver of  real  estate  where  the  legal 
title  is  in  controversy,  and  one  of  the 
parties  is  in  the  peaceable  posses- 
sion under  claim  of  right.  This 
rule,  however,  does  not  apply  where 
the  property  is  already  in  the  pos- 
session of  a  receiver,  and  a  third 
party  claiming  adversely  to  the  oth- 
ers asks  to  have  the  receivership  con- 
tinued. State  V.  Allen,  1  Tenn.  Ch. 
512. 

A  preliminary  injunction  or  re- 
ceivership will  not  be  granted  upon 
the  ground  that  the  complainant  is 
the  owner  of  the  property  and  busi- 
ness sought  to  be  reached  in  the  ac- 
tion, the  legal  title  of  which  is  in  de- 
fendant, where  the  facts  set  up  in  the 
answer  and  affidavits  amount  to  a 
denial  of  such  ownership,  and  the 
case  is  not  within  any  of  the  excep- 
tions to  the  general  rule  denying 
such  relief  under  such  circum- 
stances. Guild  V.  Meyer,  56  N.  J. 
Eq.  183. 

A  receiver  will  be  appointed  in  an 
action  involving  the  title  and  right 
to  possession  of  real  property,  where 
the  complainants  have  a  good  equi- 
table title  to  the  land  and  in  equity 
the  right  to  its  immediate  posses- 
sion, although  the  naked  legal  title  is 
outstanding,  and  it  appears  that  the 
defendants  in  possession  are  insolv- 
ent and  are  destroying  the  timber  on 
the  land.  Smith  v.  Lusk  (Ala.)  24 
So.  256. 


Page  32,  sec.  11. — Scope  of  bill  or  petition. 


In  the  appointment  the  court  acts 
only  on  well-established  principles, 
and  in  that  sense  only  can  a  receiver 
be  said  to  be  ex  debito  justitiw, 
whether    the    application    be    by    a 


judgment  creditor  or  anyone  else. 
The  court  acts  only  on  a  proper  case 
made  out.  Smith  v.  Post  Dover  & 
L.  U.  R.  Co.  12  Ont.  App.  Rep.  288. 
A  receiver  will  be  granted  without 

9 


§§  12,   13 


RECEIVERSHIPS— SUPPLEMENT. 


costs  where  the  grounds  are  doubt- 
ful. Shepherd  v.  Murdoch,  2  Mol- 
loy.  531. 

In  \\'ood  V.  Oai/nor,  1  Anibl.  395, 
the  court  refused  to  apiioint  because 
there  was  no  precedent  for  such  ac- 
tion. 

The  general  rule  is  that  a  receiver 
is  appointed  only  in  clear  cases  when 


no   adequate   remedy  at  law  exists. 
lumlin  V.   Vanhorn,  77  Ga.  315. 

In  the  appointment  the  court  may 
impose  conditions  as  to  the  payment 
of  claims,  and  order  that  they  be  paid 
out  of  the  earnings  of  the  property. 
United  States  Trust  Co.  v.  ^Vcio 
York  W.  8.  d  B.  It.  Co.  25  Fed.  Rep. 
800. 


Pag-e  33,  sec.  12. — Time  when  appointed. 


Where  the  debtor  died  after  appli- 
cation for  a  receiver,  and  two  days 
after,  without  reviving  the  action  or 


bringing  in  the  heirs,  the  receiver 
was  appointed,  held  to  be  error.  Ite 
Shcphard,  L.  R.  43  Ch.  Div.  131. 


Page  33. 


-(b)     Existence  of  'property  not  prerequisite. 


That  the  debtor  does  not  appear 
to  have  property  is  no  ground  for 
refusal  to  appoint;  but  where  it  ap- 
pears that  the  only  property  is  a 
trust  fund  under  a  devise  which  the 
debtor  is  willing  to  apply  upon  the 
demand,  the  appointment  will  be  re- 
fused. Dc  Camp  v.  Dcnipsey,  10  N. 
Y.  Civ.  Proc.  Rep.  210. 

The   answer    in   a    creditors'   bill, 


that  defendant  has  not  property  to 
the  amount  of  .$100,  is  not  a  suffi- 
cient reason  for  refusing  to  appoint 
a  receiver.  Fuller  v.  Taylor,  (1  N.  J. 
Eq.  301 ;  Fitzhugh  v.  Everingham,  6 
Paige.  29. 

That  there  is  no  other  property 
than  an  equity  of  redemption  is  not  a 
defense.  Bailey  v.  Lane,  15  Abb. 
Pr.  373,  note. 


Page  35,  sec.  13. — Must  be  a  suit  pending. 


An  order  appointing  a  receiver 
where  no  suit  is  pending  concerning 
the  property  of  which  he  is  put  in 
charge  is  void.  Merchants'  d  Mfrs. 
'Sat.  Bank  v.  Kent  Circuit  Judge,  43 
Mich.  292;  Ex  parte  Mountfort,  15 
Ves.  Jr.  445;  Re  Hancock,  27  Hun, 
575. 

The  filing  of  the  petition  in  an  ac- 
tion between  partners  is  a  prerequi- 
site to  the  appointment  of  a  receiver 
by  the  district  court,  under  Tex.  Rev. 
Stat.  1895,  art.  1465.  Webb  v.  Al- 
len, 15  Tex.  Civ.  App.  506. 

A  cause  cannot  be  pending,  within 
Ohio  Rev.  Stat.  §  5587,  so  as  to  au- 
thorize the  appointment  of  a  re- 
ceiver, before  it  has  been  commenced 
as  provided  in  §  5035 ;  and  the  ap- 
pointment of  a  receiver  in  a  cause 
where  a  petition  has  been  filed,  but 
before  a  summons  has  been  issued, 
is  invalid.  Dwelle  v.  Hinde,  8  Ohio 
10 


C.  D.  177;  Barber  Bros.  v.  Manier, 
71  iliss.  725;  Hardy  v.  McClellan, 
53  Miss.  507 ;  Guy  v.  Doak,  47  Kan. 
236. 

A  receiver  will  not  be  appointed 
on  a  petition,  but  only  on  a  bill, — 
when.  Rice  v.  Tonnele,  4  Sandf.  Ch. 
508. 

An  action  may  be  pending,  so  that 
the  court  may  appoint  a  receiver, 
though  the  notice  or  service  was  de- 
fective. Hellebush  v.  Blake,  119 
Ind.  349. 

A  motion  for  the  appointment, 
where  the  order  to  show  cause 
against  the  appointment  is  served 
before  the  commencement  of  the 
suit,  is  irregular.  Kattenstroth  v. 
Astor  Bank,  2  Duer,  632. 

A  receiver  cannot  be  appointed 
preliminary  to  the  commencement  of 
suit,  and  without  notice  such  ap- 
pointment is  void.     Jones  v.  Schall, 


MATTERS  RELATING  TO  THE  APPOINTMENT. 


§  15 


45  Mich.  379 ;  Merchants'  d  Mfrs. 
Nat.  Bank  v.  Kent  Circuit  Judge,  43 
Mich.  292. 

An  agreement  to  receive  property 
in  part  payment  of  a  judgment,  and 
an  indorsed  note  for  the  balance, 
does  not  prevent  the  filing  of  a  cred- 
itors' bill  and  the  appointment  of  a 
receiver.  Balde  v.  Smith,  5  Ch.  Sent. 
11. 

What  court  may  appoint. 

The  better  practice  in  an  applica- 
tion for  a  receiver  after  an  appeal 
has  been  taken  in  the  supreme  court 
is  to  apply  to  the  court  of  original 
jurisdiction.  Coleman  v.  Fisher 
(Ark.)   48  S.  W.  807. 

In  Alabama,  on  appeal  from  the 
register   the   question   comes   before 


the  chancellor  as  an  original  peti- 
tion, and  he  may  hear  other  evidence. 
Etowah  Min.  Co.  v.  Wills  Valley 
Min.  &  Mfg.  Co.  106  Ala.  492. 

An  application  for  the  appoint- 
ment of  a  receiver  in  supplementary 
proceedings  must  be  made  to  the 
judge  who  granted  the  order  of  ref- 
erence and  appointed  the  referee. 
Ball  V.  Goodenough,  37  How.  Pr. 
479. 

Ordinarily  a  motion  under  the 
North  Carolina  Code  for  the  appoint- 
ment of  a  receiver  for  a  corporation 
must,  at  the  option  of  the  mover, 
be  made  before  the  resident  judge  of 
the  district,  or  one  assigned  to  the 
district,  or  holding  the  courts  there- 
of by  exchange.  Worth  v.  Piedmont 
Bank,  121  N.  C.  343. 


Page  37,  sec.  15. — Grounds  upon  which  jurisdiction  is  entertained. 


A  receiver  will  not  be  appointed  if 
any  other  remedy  will  afi"ord  ample 
protection.  Etoicah  Min.  Co.  v. 
Wills  Valley  Min.  d  Mfg.  Co.  106 
Ala.  492. 

If  made  under  statutory  power  it 
is  with  great  caution.  Brabrook 
Tailoring  Co.  v.  Belding  Bros.  40 
111.  App.  326. 

Where  a  city  which  is  a  stock- 
holder in  a  corporation  is  competent 
to  prosecute  all  actions  against  it, 
and  there  are  no  funds  to  take  charge 
of,  the  appointment  is  void  and 
should  not  be  made.  Burnes  v. 
Atchison,  48  Kan.  507. 

To  justify  the  appointment  it 
must  appear  that  the  possession  of 
defendant  was  obtained  by  fraud,  or 
that  the  income  is  in  danger  of  loss 
from  neglect,  waste,  or  misconduct. 
Gilbert  v.  Block,  51  111.  App.  510. 

Courts  do  not  appoint  receivers  as 
a  punishment  for  past  dereliction  or 
because  of  past  dangers.  In  pass- 
ing upon  the  appointment  of  a  re- 
ceiver for  a  solvent,  prosperous  cor- 
poration, something  more  must  be 
shown  than  past  misconduct.  Orig- 
inal Vienna  Bakery,  C.  d  N.  Co.  v. 
Heissler,  .50  111.  App.  400. 

The  appointment  of  a  receiver  for 
a  railroad  will  not  be  made  merely 
for  default  in  payment  of  interest. 


Loss  m_ust  be  shown.  Union  Trust 
Co.  V.  St.  Louis,  I.  M.  d  S.  R.  Co.  4 
Dill.  114;  Buffalo  Chemical  Works 
V.  Bank  of  Commerce,  79  Hun,  93; 
Drought  v.  Perceval,  2  Molloy,  502. ' 

A  partner  who  upon  dissolution 
leaves  assets  with  his  copartner  to 
be  applied  to  the  payment  of  firm 
debts,  which  the  latter  assumes,  is 
entitled  to  the  appointment  of  a  re- 
ceiver to  prevent  waste  and  misap- 
plication of  the  assets  by  the  copart- 
ner.    Allen  V.  Cooley,  53  S.  C.  414. 

A  receiver  should  not  be  appointed 
of  a  fund  in  the  hands  of  the  sheriff, 
on  wliich  a  lien  is  claimed,  unless 
it  appears,  as  required  by  Ky.  Civ. 
Code,  §  298,  that  there  is  danger  of 
its  loss  or  removal.  Combs  v. 
Breathitt  County,  20  Ky.  L.  Rep. 
1247. 

A  receiver  may  be  appointed  in  a 
suit  by  a  judgment  creditor,  over 
stock  standing  in  the  name  of  the 
debtor's  wife,  where  there  is  reason- 
able ground  to  apprehend  that  it  will 
be  removed  beyond  the  jurisdiction 
of  the  court,  or  will  be  lost.  State 
Bank  v.  Gill,  23  Hun,  410. 

But  the  appointment  is  never  in 
anticipation  of  something  that  may 
happen.  Chadron  Bkg.  Co.  v.  Ma- 
honey,  43  Neb.  214. 

A  receiver  pendente  lite  will  not 

11 


§  15 


RECEIVERSHIjeS— SUPPLEMENT. 


be  appointed  in  an  action  to  recover 
possession  of  real  property,  where 
plaintiff's  title  is  put  in  issue,  in  the 
absence  of  some  special  circum- 
stances rendering  such  an  appoint- 
ment necessary  to  preserve  plaintiff's 
rights.  Seng f elder  v.  Hill,  16  Wash. 
355. 

The  power  to  appoint  a  receiver  of 
a  corporation  will  not  be  exercised 
except  upon  a  grave  necessity  and  a 
clear  showing  that  the  applicant  has 
otherwise  no  adequate  remedy,  and 
is  in  danger  of  suffering  irreparable 
loss.  People's  Invest.  Co.  v.  Craw- 
ford (Tex.  Civ.  App.)   45  S.  W.  738. 

Nor  because  an  officer  is  in  a  posi- 
tion to  betray  it,  where  there  is  no 
evidence  to  establish  any  probability 
that  he  will  so  act.  Young  v.  Rutan, 
69  111.  App.  513;  Dozier  v.  Logan, 
101  Ga.  173;  Boston  Invest.  Co.  v. 
Pacific  Short-Line  Bridge  Co.  104 
Iowa,  311. 

A  receiver  should  not  be  appointed 
on  the  ground  that  a  corporation  is 
insolvent  or  in  imminent  danger  of 
insolvency,  when  its  assets  are  three 
times  its  stated  indebtedness,  and  it 
is  not  shown  that  it  is  attempting 
fraudulently  to  dispose  of  its  prop- 
erty. Miller  v.  Southern  Land  & 
Lumber  Co.  53  S.  C.  364. 

A  receiver  of  property  conveyed 
by  an  insolvent  partnership  to  one 
of  the  firm  creditors  at  an  overvalua- 
tion, to  hinder  and  defeat  other 
creditors,  should  not  be  appointed  ab- 
solutely without  giving  the  pur- 
chasers the  alternative  of  giving 
bond  and  security,  where  they  are 
not  alleged  to  be  insolvent,  and  the 
property  consists  of  a  sawmill  and 
fixtures  and  a  large  number  of  ani- 
mals used  therewith,  the  care  of 
which  would  be  a  great  expense  to  a 
receiver.  Stillwell  v.  Savannah 
Grocery  Co.  88  Ga.  100. 

The  appointment  of  a  receiver  is 
a  common  practice  in  case  of  the 
mortgage  of  tolls  or  income.  Rug- 
gles  V.  Southern  Min7iesota  R.  Co.  5 
Chicago  Legal  News,  110,  17  Int. 
Eev.  Rec.  29;  Potts  v.  Warwick  & 
B.  Canal  Nav.  Co.  1  Kay,  142,  143; 
Tripp  V.  Chard  R.  Co.  11  Hare,  249, 
17  Jur.  887;  Dumville  v.  Ashhrooke, 
3  Russ.  Ch.  98;  Imperial  Mercantile 
12 


Credit  Asso.  v.  Newry  &  A.  R.  Co. 
Ir.  Rep.  2  Eq.  1 ;  Knapp  v.  Williams, 
4  Ves.  Jr.  430,  note  a;  Crewe  v. 
Edleston,  1  De  G.  &  J.  93. 

A  judgment  creditor  of  a  railroad 
company,  to  whom  the  company's 
lands  have  been  delivered  under  a 
writ  of  elegit,  is  entitled  to  a  re- 
ceiver of  the  tolls  and  earnings. 
Kingston  v.  Cambridge  R.  Co.  41  L. 
J.  Ch.  N.  S.  152. 

The  appointment  of  a  receiver  for 
the  purpose  of  preserving  the  future 
rents  of  real  property,  to  abide  the 
result  of  an  action  concerning  the 
same,  is  not  authorized  where  the  ac- 
tion proceeds  on  the  assumed  owner- 
ship by  plaintiff  of  the  land  and  tlie 
profits  thereof,  and  involves  merely 
legal,  as  distinguished  from  equi- 
table, rights.  San  Jose  Safe  Deposit 
Bank  of  Savings  v.  Bank  of  Madera, 
121  Cal.  543. 

A  receiver  may  be  appointed  un- 
der §  24  of  the  garnishment  act  of 
Illinois.  Myres  v.  Frankeiithal,  55 
111.  App.  390. 

A  receiver  of  corporate  stock 
pledged  to  secure  a  debt  which  is  past 
due  may  be  appointed  in  proceedings 
in  aid  of  a  garnishment  against  the 
pledgee,  with  the  garnishee's  con- 
sent, to  sell  the  stock  for  payment 
of  the  amount  due  the  pledgee  and 
to  impound  the  surplus  to  await  the 
result  of  the  original  action  against 
the  debtor,  where  the  latter  is  in- 
solvent. Kimbrough  v.  J.  K.  Orr 
Shoe  Co.  98  Ga.  537. 

The  court  will  refuse  to  appoint 
a  receiver  pending  a  plea  to  the  ju- 
risdiction, but  may  order  an  im- 
mediate hearing  on  the  plea.  Ewing 
V.  Blight,  3  Wall.  Jr.  139. 

Nor  will  a  receiver  of  the  prop- 
erty of  a  railroad  in  Florida  be  ap- 
pointed in  a  suit  in  New  York.  Kit- 
tel  V.  Augusta,  T.  &  G.  R.  Co.  78 
Fed.  Rep.  855. 

The  power  to  remove  a  receiver 
and  appoint  another  does  not  depend 
on  notice  to  the  stockholders.  Hoyt 
V.  Continental  Ins.  Co.  21  N.  Y. 
Week.  Dig.  145. 

An  appointment  may  be  made  and 
an  early  sale  of  the  property  or- 
dered, to  save  forfeiture  of  the  fran- 
chises of  a  corporation.     Boston  In- 


MATTERS  RELATING  TO  THE  APPOINTMENT.    §g  16,  17 


vest.  Co.  V.  Pacific  Short-Line  Bridge 
Co.  104  Iowa,  311. 

On  application  of  the  seller  of 
goods  in  an  action  to  rescind  a  sale 
for  fraud,  the  court  may  appoint  a 
receiver,  where  the  goods  are  in  the 
hands  of  a  sheriff,  to  secure  the  pay- 
ment of  mortgages,  and  this,  though 
the  mortgagees  are  solvent.  Ex- 
change Bank  v.  H.  B.  Claflin  Co.  100 
Ga.  040. 

The  court  will  not  appoint  a  re- 
ceiver of  a  partnership  in  supplemen- 
tal proceedings  against  the  firm, 
when  a  receiver  has  already  been  ap- 
pointed in  an  action  to  dissolve  the 
firm,  where  the  former  proceedings 
are  bona  fide.  Price  v.  Price,  21 
App.  Div.  597. 

That  mandamus  will  lie  to  compel 
a  cemetery  company  to  repair  princi- 
pal approach  to  cemetery  grounds 
will  not  prevent  the  appointment  of 
a  receiver  to  accomplish  such  object, 
where  the  duty  to  repair  is  clear  and 
the  latter  method  Avill  be  more  ex- 
peditious. Houston  Cemetery  Co.  v. 
Dreiv,  13  Tex.  Civ.  App.  536. 

As  a  condition  of  the  appointment 


the  court  in  a  foreclosure  proceeding 
may  order  the  receiver  to  pay  such 
outstanding  debts  for  labor,  supplies, 
equipments,  and  permanent  improve- 
ments as  are  reasonable.  Central 
Trust  Co.  V.  Utah  C.  R.  Co.  16  Utah, 
12. 

In  the  absence  of  a  cause  of  action 
entitling  the  plaintiff  to  recover,  the 
court  will  not  appoint  a  receiver  an- 
cillary to  a  stockholder's  suit. 
Peoples'  Invest.  Co.  v.  Crawford 
(Tex.  Civ.  App.)   45  S.  W.  738. 

A  court  has  no  power  to  appoint 
a  receiver  of  property  out  of  its  ju- 
risdiction. Baltimore  Bldg.  &  Loan 
Asso.  V.  Alderson,  99  Fed.  Rep.  142, 
32  C.  C.  A.  542. 

Where  the  mortgage  provides  for 
the  appointment  upon  the  com- 
mencement of  an  action  to  foreclose, 
without  regard  to  the  solvency  or  in- 
solvency of  the  mortgagor  or  the 
value  of  the  premises,  and  without 
notice,  and  it  appears  that  the  water 
taxes  and  insurance  are  unpaid,  as 
well  as  the  principal  and  interest, 
a  receiver  will  be  appointed.  Fletch- 
er V.  Krupp,  35  App.  Div.  586. 


Page  45,  sec.  16. — When  jurisdiction  not  entertained. 


The  court  will  not  by  mandamus 
compel  the  governor  to  appoint  a  re- 
ceiver  to   collect  taxes.     League  v. 


Broionsville    Taxing    Dist.    29 
Rep.  742,  752. 


Fed. 


Page  45,  sec.  17. — Effects  of  appointment, 
(a)   Settlement  of  disputes  as  to  title. 


In  an  action  where  two  parties 
claim  possession  and  are  interfer- 
ing with  each  other,  appointment  is 
proper.  Hlaicacek  v.  Bohman,  51 
Wis.  92;  Corbin  v.  Thompson,  141 
Ind.  128. 

The  appointment  of  a  receiver  in 
the  case  of  a  disputed  title  to  real 
property  is  in  the  judicial  discretion 
of  the  court,  and  will  be  made  before 
judgment  in  a  proper  case,  although 
there  is  a  tenant  in  possession  to  re- 
ceive the  rents.  Foxivell  v.  Van 
Orutten,  75  L.  T.  N.  S.  311. 

The  court  since  the  passage  of  the 


English  judicature  act  1873,  §  25, 
subs.  8,  has  jurisdiction  to  appoint 
a  receiver  in  the  case  of  a  disputed 
title  to  real  property.     Ibid. 

Appointment  where  title  involved 
and  the  party  in  possession  is  com- 
mitting waste.  Collins  v.  Richart, 
14  Bush,  G21. 

A  receiver  may  be  appointed 
against  the  legal  title,  in  a  clear  case. 
Lloyd  V.  Passingham,  16  Ves.  Jr.  59. 

Where  upon  answer  there  is  a 
strong  presumption  against  the  de- 
fendant's title,  a  receiver  will  be 
granted.     Stitwell    v.    Williams,    6 

13 


§17 


RECEIVERSHIPS— SUPPLEMENT. 


Madd.  &  G.  49,  Same  case  on  appeal, 
Jac.  280. 

Places    property    in    custodia    legis. 

Money  or  property  in  the  receiv- 
ers' hands  is  in  custodia  legis.  De- 
lany  v.  Mansfield,  1  Hogan,  234. 


But  an  order  that  a  receiver  shall 
be  appointed  to  take  charge  of  goods 
does  not  place  such  goods  in  custodia 
legis.  Dutcher  v.  Culver,  24  j^Iinn. 
584. 


Page  51. — (f)  Leaves  the  rights  of  all  parties  in  statu  quo. 


The  mere  appointment  determines 
no  right  existing  at  tlie  time.  Chase's 
Case,  1  Bland  Ch.  200. 

The  appointment  of  a  receiver  does 
not  determine  the  rights  existing,  or 
affect  the  liens  attaching  to  the  prop- 
erty over  which  the  i-eceivership  ex- 
tends,— such  as  the  lien  of  attorneys 
for  services  performed  for  a  corpo- 
poration.  Be  Montgomery  (N.  J. 
Eq.)  30  Chicago  Legal  News,  237; 
Bennett  v.  Complete  Electric  Constr. 
Co.  8  App.  Div.  301 ;  Lowenherg  v. 
Jeff  cries,  74  Fed.  Rep.  385 ;  Hays  v. 
Lycoming  F.  Ins.  Co.  99  Pa.  621. 

But  it  has  been  held  that  the  dis- 


solution of  a  corporation  and  the  ap- 
pointment of  a  receiver  dissolve  at- 
tachments pending.  Wilcox  v.  Con- 
tinental L.  Ins.  Co.  56  Conn.  488. 

And  does  not  disable  the  corpora- 
tion from  moving  to  vacate  the  at- 
tachment against  property.  Waver- 
ly  Co.  V.  Worthington  Co.  4  Misc. 
447. 

The  lien  of  an  execution  is  unaf- 
fected. Re  Muehlfeld  &  H.  Piano 
Co.  12  App.  Div.  492. 

And  so  with  the  lien  of  encum- 
brances. Bryant  v.  Bull,  L.  R.  10 
Ch.  Div.  153. 


Page  52. — (g)  Presumption   of  appointment. 


There  is  no  presumption  that  re- 
ceivers were  appointed  from  the  fact 
that  they  have  acted.  This  presump- 


tion only  applies  to  public  officers. 
International  &  G.  N.  R.  Co.  v.  Moore 
(Tex.  Civ.  App.)   32  S.  W.  379. 


Page  53, — (h)   Over  what   property. 


If  the  appointment  of  a  receiver 
to  take  possession  of  the  property  of 
a  natural  person  upon  the  complaint 
of  the  holder  of  matured  chattel 
mortgages  were  proper  in  any  case, 
it  could  only  be  for  the  property  cov- 
ered by  the  mortgage,  and  could  not 
include  other  property.  State  v. 
Union  ^'at.  Bank,  145  Ind.  537. 

The  appointment  of  a  receiver  in 
an  action  to  foreclose  a  mortgage 
•which  does  not  purport  to  cover 
rents,  issues,  or  profits  does  not  cre- 
ate a  lien  upon  a  growing  crop,  un- 
der Cal.  Code  Civ.  Proc.  §  564,  subd. 
2.  Locke  V.  Klunker,  123  Cal.  231; 
Ellis  V.  Vernon  Ice,  L.  &  TF.  Co.  86 
Tex.  109;  Georgia  v.  Atlantic  &  O. 
R.  Co.  3  Woods,  434 ;  Roxbury  v.  The 
14 


Lotta.  65  Fed.  Rep.  319;  J  .W.  Dann 
Mfg.  Co.  V.  Parkhurst,  125  Ind.  317; 
Arnold  v.  Weimer,  40  Neb.  216:  Van 
Wagoner  v.  Paterson  Gaslight  Co.  23 
N.  J.  L.  283. 

A  lien  on  funds  is  followed  into 
the  hands  of  a  receiver, — as,  where 
a  dividend  has  been  declared  and  set 
apart  for  stockholders.  Re  Le  Blanc, 
14  Hun,  8. 

By  adjudication  of  insolvency  and 
the  appointment  of  a  receiver,  the 
debts  of  creditors  at  large  are  fas- 
tened on  its  property.  Graham  But- 
ton Co.  V.  Spielmann,  50  N.  J.  Eq. 
120. 

The  duty  to  repair  a  section  of  a 
turnpike  road  in  a  receiver's  hands 
will  be  shifted  from  the  owner  to  the 


MATJERS  RELATING  TO  THE  APPOINTMENT. 


§  17 


receiver  by  a  decree  placing  a  por- 
tion of  the  road  in  the  hands  of  a  re- 
ceiver, and  directing  him  to  collect 
the  tolls.  Lock  v.  FranlcUn  <&  H, 
Turnpk.  Co.  100  Tenn.  163. 

The  equitable  rights  of  parties. 

The  receiver  takes  the  property 
subject  to  the  equity  of  a  mortga- 
gee to  have  the  mortgage  reformed  so 
as  to  include  all  the  property  in- 
tended, though  the  mortgage  may  be 
invalid  because  not  recorded.  Ryder 
V.  Ryder,  19  R.  I.  188. 

The  equity  of  §  3GC9,  Ga.  Code,  ap- 
plies to  the  taking  possession  of 
property  by  a  receiver  under  the  or- 
der of  court,  as  well  as  the  le\'y  of 
an  execution.  Georgia  v.  Atlantic 
d  G.  R.  Co.  3  Woods,  434. 

The  mere  filing  of  a  bill  and  serv- 
ice of  process  do  not  prevent  a  rail- 
road company  from  surrendering 
steel  rails  on  its  right  of  way  but 
not  attached  to  the  road.  Illinois 
Steel  Co.  V.  Putnam,  30  U.  S.  App. 
358,  68  Fed.  Rep.  515,  15  C.  C.  A. 
556. 

Gives  plaintiff  a  lien. 

The  filing  of  a  creditors'  bill  and 
appointment  of  a  receiver  gave  plain- 
tiffs a  lien  on  the  debtor's  property 
prior  to  a  subsequent  bill  against  the 
lessee  debtor,  though  the  specific 
property  was  not  mentioned  in  the 
first.  Swift's  Iron  &  Steel  ^\orhs 
V.  Johnson,  26  Fed.  Rep.  828. 

Prevents  creditors  from  prosecuting 
suits  without  leave  of  court. 

First  Nat.  Bank  v.  Dovetail  Body 
&  Gear  Co.  143  Ind.  534;  National 
State  Bank  v.  Vigo  County  Nat. 
Bank,  141  Md.  352;  Ellis  v.  Vernon 
Ice,  L.  &  W.  Co.  80  Tex,  109. 

Does  not  abate  suits  pending. 

Toledo,  W.  &  W.  R.  Co.  v.  Beggs, 
85  111.  80,  28  Am.  Rep.  613;  Kitt- 
redge  V.  Osgood,  161  Mass.  384. 

A  claim  against  a  receiver  may  be 
reduced  to  judgment  in  a  suit  pend- 
ing when  appointment  is  made.  Pine 
Lake  Iron  Co.  v.  La  Fayette  Car 
Works,  53  Fed.  Rep.  853. 

The  fact  that  a  railroad  has  gone 
into  the  hands  of  a  receiver  is  not 


an  abatement  of  mandamus  proceed- 
ings.    People  v.  Barnett,  91  111.  422. 

Notice  of  appointment,  effect  of. 

The  appointment  of  a  receiver  is 
notice  to  all  parties  to  the  cause, 
but  is  not  notice  to  tenants  who  are 
not  parties.  As  to  such  it  is  only 
notice  from  the  time  the  order  is 
served.  Hensworth  v.  Maunsell,  1 
Hogan,  170. 

An  agent  of  an  insurance  com- 
pany, authorized  to  surrender  pol- 
icies and  return  the  unearned  pre- 
miums to  policy  holders  upon  ten 
days'  notice  in  writing,  is  not  en- 
titled to  do  so  after  learning  of  the 
insolvency  of  the  insurance  com- 
pany and  the  intention  to  apply  for 
the  appointment  of  a  receiver. 
American  Casualty  Ins.  &  S.  Co.  v. 
Arrott,  180  Pa.  1. 

Effect  of,  as  to  injunction. 

An  injunction  against  a  corpora- 
tion is  binding  on  its  receiver  sub- 
sequently appointed.  Steel  v.  Gor- 
don, 14  Wash.  521. 

And  it  is  the  duty  of  a  receiver  to 
see  that  the  injunction  -is  obeyed. 
Stafford  v.  People,  85  111.  558. 

Effect  as  to  statute  of  limitations. 

The  appointment  of  a  receiver  does 
not  set  in  motion  the  statute  of  lim- 
itations. Riddle  v.  First  Nat.  Bank, 
27  Fed.  Rep.  503;  Harrison  v.  Dig- 
nan,  1  Connor  &  L.  376. 

Effect  as  to  specific  performance. 

Specific  performance  of  a  contract 
to  lease  the  joint  use  of  part  of  the 
track  of  a  railroad  is  not  prevented 
by  the  fact  that  receivers  have  been 
appointed  of  such  road,  where  it  does 
not  appear  that  specific  performance 
will  cast  a  burden  upon  the  ti"ack 
property,  injurious  or  prejudicial  to 
the  interests  of  those  interested 
therein.  Chicago,  B.  &  Q.  R.  Co.  v. 
Union  P.  R.  Co.  74  Fed.  Rep.  989. 

Effect  as  to  corporations. 

The  mere  appointment  of  a  re- 
ceiver of  an  insurance  company,  and 
partial  assumption  and  control  of  its 
affairs,  are  not  a  judicial  recogni- 
tion of  the  due  incorporation  of  the 

15 


§  18 


RECEIVERSHIPS— SUPPLEMENT. 


company.  People  v.  Van  Rensse- 
laer his.  Co.  38  Barb.  323. 

The  mere  appointment  of  a  re- 
ceiver does  not  work  a  dissolution  of 
a  corporation.  Steinhauer  v.  Col- 
mar,  1 1  Colo.  App.  494 ;  Del  Valle  v. 
Navarro,  21  Abb.  N.  C.  136. 

Or  destroy  the  corporate  entity. 
Second  Xat.  Bank  v.  New  York  Silk 
Mfg.  Co.  11  Fed.  Rep.  532. 

Or  take  from  it  the  exercise  of  the 
corporate  franchises.  Notwithstand- 
ing the  receivership  the  corpora- 
tion may  still  exercise  its  franchises, 
if  in  so  doing  the  receiver  is  not  in- 
terfered with.  Ohio  d  M.  R.  Co.  v. 
Russell,  115  111.  52;  Aiihurn  Button 
Co.  v.  Sylvester,  68  Hun,  401. 

And  the  sale  of  property  by  a  re- 
ceiver does  not  prohibit  stockhold- 
ers from  electing  directors.  State, 
Atty.  Gen.,  v.  Merchant,  37  Ohio  St. 
251. 

Receivers  of  corporations  are  not 
purchasers  for  valuable  considera- 
tion, but  are  voluntary  assignees 
and  personal  representatives  of  the 
company.  Van  Wagoner  v.  Pater- 
son  Gaslight  Co.  23  N.  J.  L.  283. 

An  order  of  a  court  having  juris- 
diction, appointing  a  general  receiv- 
er of  a  corporation  for  the  purpose 
of  liquidation,  is  an  adjudication 
which  operates  as  a  sequestration  of 
the  property, — especially  when  it  is 
plain  that  such  is  the  intention  and 
scope  of  the  order.  Temple  v.  Glas- 
gow, 42  U.  S.  App.  417,  80  Fed.  Rep. 
441,  25  C.  C.  A.  540. 

Suits  hy  and  against. 

An  act  repealing  a  charter  and  ap- 
pointing receivers  incapacitates  the 
corporation  from  suing  or  being 
sued.     Whitman  v.  Cox,  20  Me.  335. 

The  effect  of  a  general  receivership 
of  a  corporation,  accompanied  by  an 
injunction  restraining  its  officers 
and  agents  from  exercising  any  con- 
trol over  its  property  or  books,  or 
from  interfering  with  the  control  of 
the  receivers,  and  enjoining  any  suits 


against  the  corporation, — precludes 
creditors  from  prosecuting  claims  to 
judgment  without  leave  of  the  court. 
Temple  v.  Glasgow,  42  U.  S.  App. 
417,  80  Fed.  Rep.  441,  25  C.  C.  A. 
540. 

Except  in  rare  cases,  stockholders 
cannot  intervene  where  the  corpora- 
tion is  dissolved  and  a  receiver  is  ap- 
pointed. People  V.  Cataract  Bank, 
5  Misc.  14. 

The  appointment  of  a  receiver  for 
a  national  bank  does  not  preclude  a 
stockholder  from  maintaining  an  ac- 
tion against  the  directors  for  their 
fraud  or  negligence  in  allowing  the 
publication  of  a  false  statement  of 
the  condition  of  the  bank,  by  which 
the  plaintiff  was  induced  to  purchase 
his  stock.  Houston  v.  Thornto7i, 
122  N.  C.  365. 

Discharges  officers  and  servants  of 
corporation. 

The  order  of  court  appointing  a 
receiver  and  manager  of  a  railroad 
company  has  the  effect  of  a  notice 
discharging  the  company's  officers 
and  servants.  Reid  v.  Explosives 
Co.  56  L.  J.  Q.  B.  N.  S.  68 ;  Rochester 
V.  Bronson,  41  How.  Pr.  78,  82. 

Terminates    stockholders'     liability, 
when. 

The  appointment  of  a  receiver  for 
a  building  and  loan  association  ter- 
minates the  liability  of  stockholders 
for  monthly  dues.  Buist  v.  Bryan, 
44  S.  C.  121,  29  L.  R.  A.  127. 

Makes  funds  of  bank  trust  fund. 

Riddle  v.  First  Nat.  Batik,  27  Fed. 
Rep.  503. 

Disables  corporation  from  assigning. 

After  a  receiver  has  been  ordered 
an  insolvent  corporation  has  no  right 
to  assign  portions  of  its  rent  and 
personal  estate.  It  would  be  a  fraud 
upon  the  process  and  proceedings  of 
the  court.  Leavitt  v.  Tylee,  1  Sandf. 
Ch.  207. 


Page  54,  sec.  18. — Courts  exercising  jurisdiction. 


For  the  provisions  of  N.  C.  Code, 
§§  338,  339,  enlarging  jurisdiction 
in  the  appointment  of  receivers,  see 
16 


John  L.  Loper  Lumber  Co.  v.  Wal- 
lace, 93  N.  C.  22. 

Prior  to  April  26,  1893,  the  court 


MATTERS  RELATING  TO  THE  APPOINTMENT. 


§  18 


of  common  pleas  of  Pennsylvania 
had  no  jurisdiction  to  appoint  re- 
ceivers. Fraternal  Guardian's  As- 
signed Estate,  159  Pa.  603. 

The  English  judicature  act  1873, 
§  25,  subs.  8,  enables  any  judge  of 
the  high  court  to  appoint  a  receiver 
of  a  decedent's  estate,  notwithstand- 
ing the  absence  of  lis  pendens;  but 
applications  for  such  order,  being  on 
the  way  to  probate  proceedings,  are 
properly  made  in  the  probate  divi- 
sion, and,  if  made  elsewhere,  will  not 
be  encouraged.  Bearing  v.  Brooks, 
54  L.  J.  Ch.  N.  S.  694. 

The  appointment  of  a  receiver  of 
a  natural  person  at  the  instance  of 
a  creditor,  not  in  an  auxiliary  pro- 
ceeding, but  upon  a  complaint  in 
which  the  appointment  is  the  sole  re- 
lief sought,  is  not  authorized  by  the 
practice  under  the  common  law  or 
by  the  Indiana  statutes.  State  v. 
Union  Nat.  Bank,  145  Ind.  537. 

Circuit  courts  are  authorized  by 
W.  Va.  Code,  chap.  53,  §§  58,  59,  in 
proper  cases  therein  set  forth,  to  ap- 
point receivers  for  and  wind  up  the 
aflfairs  of  foreign  corporations  which 
have  done  business,  acquired  prop- 
erty, and  contracted  debts  in  the 
state.  Sicing  v.  Bentley  &  G.  Fur- 
niture Co.  (W.  Va.)  31  S.  E.  925. 

The  jurisdiction  conferred  upon 
the  circuit  court  by  Mo.  Rev.  Stat. 
1889,  §§  2790-2792,  to  appoint  re- 
ceivers for  business  corporations  at 
the  instance  of  creditors  in  certain 
cases,  may  be  exercised  by  the  judge 
in  vacation,  in  view  of  §  2792,  pro- 
viding that  the  jurisdiction  is  to  be 
"exercised  as  in  ordinary  cases." 
Glover  v.  St.  Louis  Mut.  Bond  In- 
vest. Co.  138  Mo.  408. 

The  previous  execution  of  an  as- 
signment for  creditors  by  a  corpora- 
tion does  not  defeat  the  jurisdiction 
of  the  court,  under  the  Texas  stat- 
ute, to  appoint  a  receiver  for  an  in- 
solvent corporation.  Milam  County 
Co-Op.  Cotton  &  M.  Alliance  v.  Ten- 
nent  Stribling  Shoe  Co.  (Tex.  Civ. 
App.)  40  S.  W.  331,  Rehearing  De- 
nied in  40  S.  W.  1027. 

N.  C.  Rev.  Code,  chap.  26,  §§  5,  6, 
oust  the  former  equity  jurisdiction 
to  appoint  receivers  at  the  instance 
of  creditors.     The  statutory  remedy 


is  exclusive.  Von  Glahn  v.  De  Ros- 
set,  81  N.  C.  467. 

State  courts  have  jurisdictions  of 
actions  against  receivers  of  the  Fed- 
eral court.  Schonberg  v.  Cowen,  7 
Ohio  Dec.  522. 

The  jurisdiction  of  a  state  court 
which  has  appointed  a  railroad  re- 
ceiver, to  direct  him  as  to  the  wages 
to  be  paid  for  operating  the  road 
within  that  state,  is  not  defeated  by 
the  fact  that  the  employees  in  oper- 
ating the  road  cross  the  state  bound- 
ary and  incidentally  perform  some 
services  in  another  state,  although 
the  receivership  is  ancillary  to  a  re- 
ceivership in  such  other  state.  Guar- 
antee Trust  d  S.  D.  Co.  v.  Philadel- 
phia, R.  &  N.  E.  R.  Co.  69  Conn.  709, 
38  L.  R.  A.  804. 

A  receiver  in  a  Federal  court,  who 
voluntarily  goes  into  a  state  court, 
cannot  question  the  right  of  that 
court  to  determine  the  controversy 
between  himself  and  the  other  party. 
Grant  v.  Buckner,  172  U.  S.  232,  43 
L.  ed.  430. 

A  state  court  has  jurisdiction  of 
an  action  against  a  purchaser  of  a 
railroad  under  a  mortgage  fore- 
closure to  recover  for  personal  in- 
juries sustained  in  the  collision  of 
two  trains  while  the  road  was  being 
operated  by  receivers  appointed  by 
the  United  States  circuit  court, 
where  the  decree  of  that  court  di- 
recting foreclosure  of  the  railroad 
required  the  purchaser  as  a  part  of 
the  purchase  price,  and  in  addition 
to  the  sum  paid,  to  pay  all  liabilities 
incurred  by  the  receivers  before  de- 
livery of  possession  of  the  property. 
Atchison,  T.  &  S.  F.  R.  Co.  v.  Cun- 
ningham, 59  Kan.  722. 

A  state  court  will  not  direct  the 
payment  into  court  of  the  funds  in 
the  hands  of  a  relief  department  of 
a  railroad  company,  for  which  re- 
ceivers have  been  appointed  by  a 
Federal  court,  with  a  provision  that 
they  shall  continue  the  operation  of 
the  features  of  such  relief  depart- 
ment in  accordance  with  the  regula- 
tions adopted  by  the  officers  of  the 
company.  Baltimore  &  0.  R.  Co.  v. 
Flaherty,  87  Md.  102. 

A  Federal  court  will  not  appoint 
a  receiver  and  direct  the  possession 

17 


§  18 


RECEIVERSHIPS— SUPPLEMENT. 


of  property  in  the  possession  of  a 
state  court  under  attachment, 
though  the  attachment  proceedings 
are  defective.  Southern  Bank  d  T. 
Co.  V.  Folsom,  43  U.  S.  App.  713,  75 
Fed.  Rep.  929,  21  C.  C.  A.  508;  Val 
Blatz  Brewing  Co.  v.  Walsh,  84  Fed. 
Rep.  5. 

A  circuit  court  of  the  United 
States  sitting  in  one  district  has 
power  to  appoint  a  receiver  of  the 
property  of  a  railroad  company  in 
another  district,  for  the  purpose  of 
preserving  it  pending  litigation, 
where  a  proceeding  to  foreclose  a 
mortgage  thereon  has  been  insti- 
tuted. Trinity  &  S.  B.  Co.  v.  Brown, 
91  Tex.  G73. 

Jurisdiction  of  a  United  States 
court  to  appoint  is  not  defeated  by 
the  fact  of  incipient  suits  in  a  state 
court.  Buck  v.  Piedmont  &  A.  L. 
Ins.  Co.  4  Fed.  Rep.  849. 

A  receiver  defendant  has  a  right 
to  remove  a  cause  to  the  United 
States  court  when  he  is  appointed 
over  a  national  bank.  He  acts  as 
receiver  under  the  laws  of  the  United 
States,  and  the  removal  act  there- 
fore applies.  Soicles  v.  Witters,  43 
Fed.  Rep.  700. 

The  appointment  of  a  receiver  does 
not  deprive  a  bankrupt  court  of  ju- 
risdiction. Re  Independent  Ins.  Co. 
Holmes,  103 ;  Re  National  L.  Ins.  Co. 
6  Biss.  35. 

Federal  courts  of  another  state 
will  not  refuse  to  entertain  garnish- 
ment against  a  receiver  on  the  pe- 
tition of  citizens  within  its  juris- 
diction, when  no  objection  to  the  ju- 
risdiction on  other  grounds  exists. 
Central  Trust  Co.  v.  Chattanooga  R. 
d  C.  R.  Co.  68  Fed.  Rep.  G85. 

The  filing  of  a  bond  and  its  ap- 
proval by  a  state  court,  as  required 
by  the  state  statute  in  case  of  an  as- 
signment for  creditors,  is  not  a  ju- 
dicial proceeding  which  gives  the 
state  court  jurisdiction  of  the  prop- 
erty, so  as  to  prevent  a  Federal  court 
from  appointing  a  receiver  for  it. 
Watson  V.  Bettman,  88  Fed.  Rep. 
825. 

In  case  of  conflict  between  the  di- 
rections of  the  primary  court  and 
one  of  ancillary  jurisdiction,  to  a  re- 
ceiver, the  directions  of  the  primary 
18 


court  will  control  in  matters  of  gen- 
eral administration,  and  those  of  the 
local  court  in  local  administration; 
and  the  question  as  to  what  shall  be 
done  with  personal  property  within 
the  jurisdiction  of  the  local  court 
and  encumbered  with  a  local  lien  is 
pre-eminently  a  matter  of  local  ad- 
ministration. Fletcher  v.  Uarney 
Peak  Tin-Min.  Co.  84  Fed.  Rep.  555. 

The  infirmity  in  the  jurisdiction 
of  a  suit  to  foreclose  a  mortgage  up- 
on the  property  of  a  corporation,  in 
which  a  receiver  has  been  appointed, 
arising  from  the  collusion  of  the 
original  parties,  which  would  other- 
wise require  dismissal  of  the  suit, 
will  not  deprive  the  court  of  power 
to  take  cognizance  of  intervening 
petitions,  determine  the  validity  of 
the  claims  asserted,  and  give  due  ef- 
fect to  valid  claims  by  affording  the 
jietitioners  appropriate  relief.  Elec- 
trical Supply  Co.  V.  Put-In-Bay 
Watenvorks,  Light  d  R.  Co.  84  Fed. 
Rep.  740. 

The  receiver  must  be  appointed 
by  the  judge,  and  not  the  clerk. 
Parks  V.  Sprinkle,  G4  N.  C.  637. 

And  by  the  court,  and  not  the 
chancellor.  Delaicare  Bay  &  C.  M. 
R.  Co.  V.  Markley,  45  N.  J.  Eq.  139. 

A  receiver  may  be  appointed  in  an- 
other district  than  that  in  which 
supplementary  proceedings  are  pend- 
ing. Jacohson  v.  Doty  Plaster  Mfg. 
Co.  32  Hun,  43G. 

The  general  rule  in  regard  to  con- 
current jurisdiction,  that  the  court 
first  obtaining  control  excludes  the 
other,  does  not  apply  to  a  case  where 
an  insignificant  portion  of  the  prop- 
erty is  taken  possession  of,  and  the 
case  dismissed  befoi'e  suit  in  the 
otlicr  court.  Liggett  v.  Glenn,  4  U. 
S.  App.  438,  51  Fed.  Rep.  381,  2  C. 
C.  A.  280;  Bell  v.  Ohio  Life  d  T.  Co. 
1  Biss.  260. 

Where  a  United  States  circuit 
court  has  appointed  receivers  for 
that  part  of  a  line  of  road  within 
its  jurisdiction,  another  court  with- 
in whose  jurisdiction  a  part  of  the 
line  runs  may  appoint  the  same  re- 
ceivers, where  the  parts  of  the  road 
are  not  capable  of  separate  manage- 
ment. Dillon  V.  Oregon  Short  Line 
d  V.  N.  R.  Co.  66  Fed.  Rep.  622. 


MATTERS  RELATING  TO  THE  APPOINTMENT. 


§  18 


The  right  of  a  creditor  in  a  court 
of  equity  to  the  appointment  of  a  re- 
ceiver is  not  taken  away  by  the  Illi- 
nois statute  conferring  power  on 
the  state  auditor  to  file  a  bill  and 
procure  such  appointment.  People 
V.  Globe  Sav.  Bank  (111.  C.  C.)  29 
Chicago  Legal  News,  396,  14  Nat. 
Corp.  Eep.  723,  Distinguishing  Peo- 
ple V.  Weigley,  155  111.  491. 

A  court  of  equity  has  no  jurisdic- 
tion to  appoint  a  receiver  for  the  col- 
lection of  taxes  of  a  school  district 
where  the  trustees  are  unable  to  get 
anyone  to  serve.  Grand  Rapids 
School-Furniture  Co.  v.  School  Dist. 
A'o.  29,  19  Ky.  L.  Rep.  1610. 

A  court  of  equity  has  power  to  ap- 
point a  receiver  to  wind  up  a  part- 
nership and  sell  its  real  estate, 
though  part  of  it  lies  in  another 
state.  Dunlap  v.  Byers,  110  Mich. 
109. 

A  court  of  equity  having  jurisdic- 
tion of  a  railroad  in  a  foreclosure 
suit  may  order  the  payment  of  a  ven- 
dor's lien  for  property  taken  by  the 
road,  out  of  earnings  in  the  hands 
of  the  receiver,  or  out  of  the  pro- 
ceeds of  the  sale  of  the  road,  or,  in 
the  last  extremity,  it  may  order  a 
separate  sale  of  the  portion  of  the 
road  subject  to  the  lien.  Wheeling 
Bridge  &  T.  E.  Co.  v.  Reymann  Breio- 
ing  Co.  90  Fed.  Rep.  189,  32  C.  C.  A. 
571. 

Courts  of  equity  by  virtue  of  their 
general  equitable  jurisdiction  will 
not  appoint  a  receiver  of  a  corpora- 
tion, and  assume  control  and  man- 
agement of  its  affairs,  at  the  suit  of 
a  stockholder  alleging  fraud,  mis- 
management, and  collusion  on  the 
part  of  the  corporate  authorities, 
or  ultra  vires  acts  of  the  directors  or 
of  the  corporation  itself,  but  in  such 
cases  will  limit  the  redress  granted 
to  the  specific  wrongs  charged,  and 
will  go  no  further  than  to  enjoin  or 
forbid  the  misconduct  complained 
of.  People's  Invest  Co.  v.  Craw- 
ford (Tex.  Civ.  App.)  45  S.  W.  738. 

A  court  of  law  has  no  power  to  ap- 
point. Myres  v.  Frankenthal,  55 
111.  App.  390;  Smith  v.  Los  Angeles 
County  Super.  Ct.  97  Cal.  348. 

The  supreme  court  of  a  state  will 
not   take   cognizance   of  an   alleged 


wrongful  diversion  of  the  income  ol 
a  railroad  during  a  receivership  ap- 
pointed by  the  United  States  dis- 
trict court,  but  the  complainant 
should  seek  redress  in  that  court,  or 
in  its  appellate  tribunal.  Kurtz  v. 
Philadelphia  &  R.  R.  Co.  187  Pa.  59. 
The  appellate  court  will  not  ap- 
point or  direct  the  appointment  of  a 
receiver  upon  reversing  a  judgment 
dismissing  a  bill  by  creditors  to 
reach  the  property  of  their  debtor, 
where  the  property  is  already  in  the 
possession  of  a  receiver  the  validity 
of  whose  appointment  is  attacked  in 
the  action.  Albion  Malleable  Iron 
Co.  V.  First  Nat.  Bank,  116  Mich. 
218. 

Power  of  the  court. 

The  powers  given  the  receiver  will 
be  enlarged  from  time  to  time  when 
necessary.  Ohio  Turnpike  Co.  v. 
Eotvard,  I  West.  L.  J.  216. 

The  court  may  authorize  the  re- 
ceiver of  a  railway  to  allow  an  elec- 
tric railroad  company  to  cross  its 
tracks  in  the  interest  of  the  public. 
Steioart  v.  Wisconsin  Cent.  Co.  89 
Fed.  Rep.  617. 

The  court  has  no  power  to  order 
the  sheriff  to  deliver  to  its  receiver 
treasury  warrants  seized  by  him  un- 
der a  writ  of  replevin  in  a  suit  by  a 
person  not  a  party  to  the  suit  in 
which  the  receiver  was  appointed, 
such  warrants  not  being  in  the  cus- 
tody of  the  court.  Elwell  v.  Good- 
now,  71  Minn.  383. 

A  court  of  equity  having  posses- 
sion, through  its  receiver,  of  a  rail- 
road system,  will  not  prevent  mort- 
gagees from  filing  suits  to  foreclose 
their  mortgages  on  the  property 
pending  proceedings  for  a  reorgan- 
ization of  the  road,  if  the  litigation 
over  the  reorganization  will  require 
a  month  or  more  for  its  determina- 
tion. Mercantile  Trust  Co.  v.  Balti- 
more &  0.  R.  Co.  89  Fed.  Rep.  606. 

The  court  appointing  a  receiver  of 
a  corporation  has  no  authority  sum- 
marily to  order  one  not  a  party  to 
the  action  to  deliver  to  the  receiver 
property  claimed  to  belong  to  the 
corporation,  as  he  has  a  riglit  to  have 
his  title  determined  in  an  appropri- 
ate action;  and  the  fact  that  the  ac- 

19 


^  19 


RECEIVERSHIPS— SUPPLEMENT. 


tual  possession  was  in  the  plaintiff 
in  the  action  in  which  the  receiver 
was  appointed  is  not  material,  if 
such  possession  was  not  in  his  own 
right.  Htuparich  Mfg.  Co.  v.  tian 
Francisco  Super.  Ct.  123  Cal.  290. 

The  court  should  not  direct  a  re- 
ceiver to  expose  the  property  to  the 
hazard  incident  to  the  conduct  of  a 
precarious  business,  except  so  far  as 
i^  necessary  to  preserve  tlie  existing 
status  and  maintain  the  rights  of  the 
parties.  Bigbee  v.  Summcrour,  101 
Ga.  201. 

The  district  court  has  authority, 
either  on  its  own  motion  or  that  of 
defendants,  to  require  an  accounting 
from  a  receiver  appointed  in  the  ac- 
tion, and  a  return  of  the  property  to 
the  owners  after  a  decision  of  the  su- 
preme court  in  their  favor.  Harnm 
V.  J.  Stone  d  Sons  Livestock  Co.  13 
Tex.  Civ.  App.  414. 

Mere  oral  directions  by  the  judge 
who  appointed  a  receiver  of  a  cor- 
poration, which  were  never  reduced 
to  writing,  may  be  disregarded  by 
another  judge  in  passing  upon  the 
acounts    of    the    receiver    and    his 


claims  to  allowance  for  compensa- 
tion and  expenditures, — especially 
where  the  appointing  judge  had  such 
an  interest  as  to  disqualify  him. 
United  States  Nat.  Bank  v.  National 
Bank,  U  Okla.  1G3. 

The  court  which  appointed  a  re- 
ceiver of  a  corporation  may  render  a 
judgment  directing  the  sheriff  to  sell 
land  previously  conveyed  to  the  cor- 
poration, to  satisfy  judgments 
against  the  corporation's  grantor, 
upon  determining  in  an  action  by  the 
judgment  creditors  that  the  convey- 
ance to  the  corporation  was  fraudu- 
lent as  to  them;  and  it  is  not  bound 
to  leave  the  property  in  the  hands  of 
the  receiver  and  direct  him  to  sell 
the  same  in  the  receivership  action. 
Cass  V.  Sutherland,  98  Wis.  5.31. 

The  court  having  the  custody  of 
the  property  of  an  insolvent  corpora- 
tion may,  on  the  bringing  of  an  ac- 
tion to  foreclose  a  mortgage,  order 
a  sale  by  the  receivers  of  all  the  as- 
sets of  the  corporation  not  embraced 
in  the  mortgage.  Kurtz  v.  Phila- 
delphia &  R.  R.  Co.  187  Pa.  59. 


Page  56,  sec.  19. — Conflict  of  jurisdiction. 


The  enactment  of  the  Federal 
bankruptcy  law  of  July  1,  1898,  did 
not  suspend  the  right  of  a  state 
court  to  appoint  a  receiver  for  an  in- 
solvent corporation  under  state  laws, 
when  it  had  not  been  adjudged  a 
bankrupt  under  the  law  of  Congress. 
State,  Strohl,  v.  King  County  Super. 
Ct.  (1899)  20  Wash.  545,  45  L.  R. 
A.  177. 

But  the  appointment  of  a  receiver 
by  a  state  court  will  not  prevent 
subsequent  bankrupt  proceedings  in 
the  Federal  court.  Re  Independent 
Ins.  Co.  (1872)  Holmes,  103,  Affirm- 
ing 2  Low.  Dec.  97 ;  Re  Safe  Deposit 
d-  Sav.  Inst.  (1872)  7  Nat.  Bankr. 
Reg.  392;  Re  Green  Pond  R.  Co. 
(1870)  13  Nat.  Bankr.  Reg.  118; 
Relational  L.  Ins.  Co.  (1874)  6 
Biss.  35:  Re  Xoonan  (1873)  3  Biss. 
491:  Thornhill  v.  Bank  of  Louisiana 
(1870)  1  Woods,  1,  Affirming  (1870) 
3  Nat.  Bankr.  Reg.  435 
20 


As  to  the  effect  of  the  appoint- 
ment of  a  receiver  as  an  act  of  bank- 
ruptcy, see  note  in  45  L.  R.  A.  on 
page  190. 

A  court  in  which  a  foreclosure 
suit  is  brought,  and  which  has  en- 
tered a  final  decree  adjudging  fore- 
closure and  sale  by  a  special  master, 
has  such  jurisdiction  over  the  specif- 
ic property  as  to  entitle  it  to  hold 
exclusive  jurisdiction  and  {x»ssession 
thereof  to  the  exclusion  of  any  other 
court  and  of  a  receiver  appointed 
thereby  after  such  decree  and  before 
the  sale,  so  as  to  render  the  sale  sub- 
sequent to  the  appointment  of  the 
receiver  valid.  McLane  v.  Holland 
Trust  Co.  52  U.  S.  App.  599,  sub 
nom.  Holland  Trust  Co.  v.  Interna- 
tional Bridge  d  Tramwag  Co.  85  Fed. 
Rep.  805,  29  C.  C.  A.  400. 


MATTERS  RELATING  TO  THE  APPOINTMENT.    §§  20,  21 
Page  58,  sec.  20. — Scope  of  jurisdiction. 


Jurisdiction  must  be  exercised  in 
good  faith  and  for  the  common  bene- 
fit of    all.     Re    Maskelyne    British 


Typeioriter  Co.  [1898]  1  Ch.  133,  77 
L.  T.  N.  S.  579. 


Page  59,  sec.  21. — "Who  appointed. 


As  a  rule  hut  one  receiver  appointed. 

As  a  general  rule,  subject  to  the 
discretion  of  tlie  court,  but  one  re- 
ceiver should  be  appointed  over  the 
same  property. 

Where  a  receiver  has  been  ap- 
pointed in  a  creditors'  bill,  and  sub- 
sequently on  a  bill  to  foreclose  the 
same  property  a  receiver  is  asked, 
the  receivership  in  the  former  should 
be  extended.  Myrick  v.  Selden,  36 
Barb.  15;  Lloyd  v.  Chesapeake,  0.  <& 
8.  W.  R.  Co.  65  Fed.  Rep.  351. 

After  consolidation  of  causes,  a 
receiver  in  the  former  may  be  made 
receiver  in  the  consolidated  suit. 
Central  Trust  Co.  v.  Wabash,  St.  L. 
&  P.  R.  Co.  23  Fed.  Rep.  863. 

After  the  appointment  of  a  re- 
ceiA'er  of  a  street-railroad  company 
the  court  will  not  appoint  a  separate 
receiver  for  one  of  its  branches. 
Clapp  V.  Interstate  Street  R.  Co.  61 
Fed.  Rep.  537. 

As  a  general  rule  a  receiver  ap- 
pointed in  a  prior  suit  should  not 
be  replaced  by  the  same  court  for 
the  same  property.  This  rule  has 
its  exceptions,  however.  State  v. 
.Jacksonville,  P.  &  M.  R.  Co.  15  Fla. 
201. 

The  appointment  of  a  receiver  in  a 
supplementary  proceeding  is  not  a 
bar  to  the  appointment  in  a  credit- 
ors' proceeding;  nor  need  the  same 
person  be  appointed.  State  Bank  v. 
Gill,  23  Hun,  410. 

A  receiver  may  be  appointed  by 
one  court,  though  a  different  receiver 
has  been  previously  appointed  by  an- 
other court,  and  particularly  so 
where  there  is  a  reasonable  suspicion 
of  collusion  in  the  former  appoint- 
ment. Young  v.  Aronson,  27  Fed. 
Rep.  241. 

Extension  of  receivership  justifies 
additional  security  or  removal  of. 
Wise  V.  Ashe,  1  Ir.  Eq.  Rep.  210. 


On  motion  to  extend,  the  only  par- 
ties to  be  heard  are  the  petitioner 
and  debtor.  Walsh  v.  Walsh,  11  Ir. 
Eq.  Rep.  607. 

A  receiver  will  not  be  appointed 
over  the  possession  of  another  re- 
ceiver. In  such  case  the  former  re- 
ceivership should  be  extended.  Valle 
v.  O'Reilly,  1  Hogan,  199. 

Two  receivers  of  the  same  property 
should  not  be  appointed;  and  if  an 
attempt  is  made  in  a  second  suit  the 
first  receiver  or  the  creditors  he  rep- 
resents should  be  made  parties. 
Bank  of  Mutual  Redemption  v. 
Sturgis,  9  Bosw.  608. 

A  receiver  in  one  suit  may  be  com- 
pelled to  serve  in  a  second  suit  about 
the  same  property,  and  on  refusal 
may  be  removed  from  the  first. 
Cagger  v.  Howard,  1  Barb.  Ch.  368. 

N.  Y.  Code  Civ.  Proc.  §  2466,  pro- 
hibits more  than  one  receiver  for  the 
same  debtor,  but  provides  for  an  ex- 
tension of  the  receivership  already 
made.  Garfield  Nat.  Bank  v.  Bost- 
wick,  39  N.  Y.  S.  R.  358. 

The  object  of  the  139tli  rule  in 
New  York,  relative  to  the  appoint- 
ment of  the  same  person  as  receiver 
in  different  suits  over  the  same  prop- 
erty, was  to  save  expense  and  con- 
flict between  receivers.  Cagger  v. 
Houard,  1  Barb.  Ch.  368. 

But  the  appointment  of  a  second 
receiver  is  within  the  discretion  of 
the  court.  Thau  v.  Bankers  d  M. 
Teleg.  Co.  24  Jones  &  S.  588. 

The  rule  (which  is  of  general  ap- 
plication) has  been  laid  down  that 
two  receivers  will  not  be  appointed 
unless  necessary,  and  they  must  be 
not  interested  in  the  litigation,  nor 
partisans  of  any  of  the  litigants,  nor 
nonresidents.  Meier  v.  Kansas  P. 
R.  Co.  5  Dill.  470. 

21 


§  21 


RECEIVERSniPS— SUPPLEMENT. 


Receiver  should  be  disinterested. 

An  interest  in  the  business  of  a 
corporation  is  not  a  necessary  quali- 
fication of  a  receiver  of  the  corpora- 
tion, but,  on  the  other  hand,  lack  of 
interest  is  a  strong  recommendation. 
Baync  v.  Brewer  Potter y  Co.  82  Fed. 
Rep.  391. 

And  the  best  party. 

The  best  person  should  be  ap- 
pointed without  reference  to  who 
mav  suggest  his  name.  Lespinasse  v. 
Bell,  2  Jac.  &  W.  436. 

Plaintiff's  solicitor    not    appointed. 

The  law  partner  of  plaintiff's 
solicitor  should  not  be  appointed, 
even  by  consent.  Merchants  d  Mfrs. 
2\^at.  Bank  v.  Kent  Circuit  Judge,  43 
Mich.   292. 

Officers  of  a  corporation  not. 

Neither  party,  counsel,  nor  officer 
will  be  appointed  receiver  of  a  cor- 
poration. Finance  Co.  of  Pennsyl- 
vania V.  Charleston,  C.  &  C.  R.  Co.  45 
Fed.  Rep.  430. 

The  secretary  of  an  insolvent  sav- 
ings bank  is  not  a  proper  person  to 
be  appointed,  where  he  has  made 
false  statements  as  to  its  solvency, 
and  verified  the  same.  People  v. 
Third  Avenue  Sav.  Bank,  50  How. 
Pr.  22. 

The  treasurer  of  a  railroad  com- 
pany may  be  appointed  receiver. 
Houston  V.  Rcdwine,  85  Ga.  130. 

In  England  the  general  rule  is  that 
the  directors  or  secretary,  or  some  of 
them,  of  a  railway,  will  be  appointed 
managers.  Re  Manchester  &  M.  R. 
Co.  L.  R.  14  Ch.  Div.  645. 

The  officers  of  a  corporation  may  be 
appointed  receivers.  Ralston  v. 
Washington  &  C.  River  R.  Co.  65 
Fed.  Rep.  557. 

Party  to  suit. 

Being  a  party  to  the  suit  does  not 
disqualify  a  person  from  being  re- 
ceiver. People,  Gore,  v.  Illinois 
Bldg.  &  L.  Asso.  56  111.  App.  642. 

A  solvent  partner  who  is  a  party 
may  be  appointed  receiver  of  part- 
nership property  without  compensa- 
tion. Ex  parte  Stoveld,  1  Glyn  &  J. 
303. 
22 


A  peer. 

A  peer  will  not  be  appointed.  Atiy. 
Gen.  V.  Gee,  2  Ves.  &  B.  208. 

Tritstee. 

The  position  of  receiver  is  incom- 
patible with  the  position  of  trustee, 
in  bankruptcy.  Re  Stuyvesant  Bank, 
5  Ben.  566. 

A  trustee  of  an  estate  will  not  be 
appointed  receiver  if  another  can  be 
procured.  Hibbert  v.  Jenkins,  Mss., 
quoted  in  Sykcs  v.  Hastings,  11  Ves. 

Jr.  363;  v.  Jolland,  8  Vea. 

Jr.  72. 

Assignee. 

Eichbcrg  v.  Wickham,  21  N.  Y. 
Supp.  647. 

An  assignee  for  the  benefit  of 
creditors  should  not,  after  attach- 
ment of  the  property  and  in  a  suit 
to  which  he  is  a  party,  be  appointed 
a  receiver  of  it,  since  under  Mansf. 
(Ark.)  Dig.  §  5290,  an  interested 
party  is  not  eligible  to  such  appoint- 
ment. Tait  v.  Carey  (Ind.  Terr.) 
49  S.  W.  50. 

Clerk   of  court 

The  court  may  appoint  the  clerk 
of  court  receiver,  and  his  sureties 
on  his  official  bond  will  be  liable. 
^yatcrs  V.  Melson,  112  N.  C.  89. 

One  not   acquainted   with   business. 

A  receiver,  if  otherwise  competent, 
is  not  disqualified  because  he  is  not 
acquainted  with  all  the  details  of 
the  mechanical  work  of  a  railroad 
plant.  Farmers'  Loan  d  T.  Co.  v. 
Cape  Fear  d  Y.  Valley  R.  Co.  62  Fed. 
Rep.  675. 

Resident. 

A  receiver  of  a  corporation  ap- 
pointed by  a  United  States  circuit 
court  need  not  necessarily  be  a  resi- 
dent of  the  district  in  which  the  ap- 
pointment is  made.  Baync  v. 
Brewer  Pottery  Co.  82  Fed.  Rep.  391. 

Citizen. 

Citizenship  of  a  person  is  not  a 
disqualification  for  receivership. 
Farmers'  Loan  d  T.  Co.  v.  Cape  Fear 
d  Y.  Valley  R.  Co.  62  Fed.  Rep.  675. 

The  appointment  of  an  improper 
person  does  not  render  the  appoint- 


MATTERS  RELATING  TO  THE  APPOINTMENT. 


§  22 


ment  void,  or  raake  him  the  agent  of 
the  corporation.  San  Antonio  &  A. 
r.  R.  Co.  V.  Adams,  11  Tex.  Civ.  App. 

198. 

Receiver  not  a  public  officer. 
Cohnen  v.  Sioetinie,  105  Mich.  643. 


Consent. 

Consent  to  the  appointment  of  a 
particular  person  should  not  be 
made  a  rule  of  court.  Leach  v.  Tis- 
dal,  4  Ir.  Ch.  Eep.  209. 

Only  parties  to  a  suit  can  object 
to  appointment.  Creed  v.  Moore, 
4  Ir.  Eq.  Rep.  684. 


Page  63,  sec,  22. — Form  and  scope  of  order. 


A  decree  directing  that  the  prop- 
erty of  a  corporation  be  turned  over 
to  its  receiver  should  protect  the 
right  of  its  manager  to  have  the 
secret     of     certain     manufacturing 


processes  owned  by  him  preserved 
inviolate.  Wilt  v.  Reed  Electric  Co. 
187  Pa.  424;  Webb  v.  Allen,  15  Tex. 
Civ.  App.  506. 


Page  66.- 


[h)   Collateral  attack. 


The  appointment,  if  made  in  a 
court  of  competent  jurisdiction,  and 
in  an  action  where  the  power  to  ap- 
point exists,  cannot  be  collaterally 
attacked.  Andreius  v.  Steele  City 
Bank  (Neb.)  9  Am.  &  Eng.  Corp.  Cas. 
N.  S.  452,  77  N.  W.  342 ;  Carroll  v. 
Pacific  2\  at.  Bank,  19  Wash.  639; 
Roby  V.  Title  Guarantee  &  T.  Co.  166 
111.  336;  Comer  v.  Brady,  83  Ala. 
217. 

A  creditor  who  has  brought  suit 
against  a  private  corporation  in  a 
Federal  court,  and  caused  its  prop- 
erty to  be  attached  and  sequestered 
on  a  vendor's  lien,  which  property  is 
subequently  ordered  to  be  surrend- 
ered to  a  receiver  previously  ap- 
pointed in  a  state  court,  cannot  suc- 
cessfully assail  the  order  of  appoint- 
ment for  informality  in  the  proceed- 
ings, without  asking  for  judgment  on 
its  demand,  or  disclosing  a  well- 
grounded  claim  for  damages  against 
the  receiver  personally.  Remington 
Paper  Co.  v.  Watson,  49  La.  Ann. 
1296. 

The  vendee  of  a  receiver  cannot,  in 
the  absence  of  fraud  or  mistake,  deny 
the  validity  of  the  appointment, 
where  possession  has  been  taken  by 
the  receiver.  Stclzer  v.  La  Rose,  79 
Ind.  435 ;  Jay  v.  De  Oroot,  17  Abb. 
Pr.  36,  note;  Storm  v.  Ermantrout, 
80  Ind.  214. 

Under  N.  Y.   Rev.   Stat.  vol.   2,  p. 


463,  §  36,  it  was  held  that  if  the  ap- 
pointment was  binding  on  the  cor- 
poration no  one  else  could  question 
it.  Whittlesey  v.  Frantz,  74  N.  Y. 
456 ;  Peters  v.  Carr,  2  Dem.  22 ;  Bar- 
nett  V.  Nelson,  54  Iowa,  41,  37  Am. 
Rep.  183;  Thompson  v.  Greeley,  107 
Mo.  577 ;  Elderkin  v.  Peterson,  8 
Wash.  674. 

The  appointment  of  a  receiver  by  a 
Federal  court  in  an  action  to  fore- 
close a  mortgage  is  absolutely  void 
and  subject  to  collateral  attack, 
where  the  court  never  acquired  any 
jurisdiction  of  the  cause.  Thurber 
V.  Miller  (S.  D.)   75  N.  W.  900. 

The  legality  of  the  appointment 
of  a  receiver  made  in  open  court,  in 
the  presence  of  the  adverse  party, 
without  objection  or  exception,  can- 
not be  raised  by  motion  to  set  it 
aside.  Gray  v.  Oughton,  146  Ind. 
285. 

The  appointment  of  a  receiver  can- 
not be  revoked  or  the  decree  modified 
upon  the  application  of  a  stranger 
to  the  action,  although  he  has  ac- 
quired rights  adverse  or  superior  to 
those  of  the  receiver.  Wright  v. 
Weisel,  19  App.  Div.  630. 

Where  parties  stipulate  that  a  re- 
ceiver acted  as  such  and  should  be 
protected,  the  validity  of  the  ap- 
pointment cannot  be  questioned. 
Kelsey  v.  Sargent,  40  Hun,  150,  104 
N.  Y.  663. 

23 


§  22 


RECEIVERSHIPS— SUPPLEMENT. 


Page  69. — (j)    Vacation  of. 


An  ex  parte  order  for  a  receiver- 
ship of  property  by  a  judge  in  vaca- 
tion should  also  appoint  a  very  early 
day  for  the  showing  of  cause  against 
the  order.  Utatc,  tSt.  Louis,  K.  <£  S. 
K.  Co.,  v.  Wear,  135  Mo.  230,  33  L.  R. 
A.  341. 

An  early  opportunity  to  combat 
and,  if  desired,  to  review  an  ex  parte 
appointment  of  a  receiver,  is  con- 
templated by  Mo.  Laws  1895,  p.  91, 
providing  for  an  appeal  and  the  very 


summary  determination  thereof, 
from  any  order  refusing  to  revoke, 
modify,  or  cliange  an  interlocutory 
order  api>ointiiig  a  receiver.  State, 
8t.  Louis.  K.  fC-  8.  K.  Co.,  v.  Wear, 
135  Mo.  230,  33  L.  R.  A.  341. 

A  motion  to  set  aside  an  order  ap- 
pointing a  receiver  is  made  to  the 
court,  and  not  the  judge.  Lippin- 
cott  v.  West7ay,  G  N.  Y.  Civ.  Proc. 
Rep.  74. 


Page  TO. — (k)  Appeal. 


A  receiver  cannot  be  appointed  to 
take  and  keep  possession  of  land,  and 
to  collect  the  rents,  issues,  and  profits 
thereof,  from  the  date  of  a  judgment 
for  such  rents,  until  the  further  or- 
der of  the  court,  in  order  to  carry 
such  money  judgment  into  effect, 
where  such  judgment  has  been 
stayed  by  a  proper  bond  on  appeal. 
San  Jose  Safe-Deposit  Bank  of  Sav- 
infjs  v.  Bank  of  Madera,  121  Cal.  543. 

The  appointment  will  not  be  inter- 
fered with  on  appeal,  where  it  ap- 
pears that  there  is  not  a  clear  pre- 
ponderance of  evidence  against  the 
appointment.  Cameron  v.  Grove- 
land  Iniprov.  Co.  20  Wash.  169. 

Abuse  of  discretion  must  be  shown 
to  justifj'  appellate  review  of  the  ap- 
pointment of  a  receiver.  Armstrong 
v.  Alabama  Fertilizer  Co.  105  Ga. 
515. 

In  a  foreclosure  action  a  bond  con- 
ditioned in  accordance  with  Neb. 
Code  Civ.  Proc.  §  077,  that  the  appel- 
lants will  prosecute  an  appeal  with- 
out delay,  and  will  not  during  its 
pendency  commit  or  suffer  waste 
upon  the  premises,  will  not  super- 
sede an  order  appointing  a  receiver 
for  the  property.  Lowe  v.  Riley 
(Neb.)  77  N.  W.'758. 

As  to  the  effect  of  supersedeas,  see 
Downing  v.  Dunlap  Coal  Co.  93  Tenn. 
221. 

An  order  appointing  a  receiver 
upon  conflicting  affidavits  will  not 
be  disturbed  on  appeal.  Houston 
Cemetery  Co.  v.  Drew,  13  Tex.  Civ. 
App.  536. 
24 


A  stockholder  and  officer  of  a  cor- 
poration sued  for  an  accounting  for 
mismanagement,  in  which  suit  the 
corporation  is  a  defendant,  has  no 
right  of  appeal  from  the  order  ap- 
pointing a  receiA-er  under  Ind.  Rev. 
Stat.  1894,  §  1245.  McFarland  v. 
Pierce,  151  Ind.  546. 

An  order  that,  pending  appeal,  the 
receiver  should  not  sell  or  distribute 
the  property  that  might  come  into 
his  hands,  pendingappeal  or  until  the 
further  order  of  court,  is  as  strong 
a  stay  order  as  the  court  will  make. 
People  V.  North  River  Sugar  Ref.  Co. 
23  Abb.  N.  C.  311. 

The  lien  acquired  by  the  appoint- 
ment of  a  receiver  of  a  debtor's  prop- 
erty is  not  abrogated  by  an  appeal. 
Stant0)i  V.  Heard,  100  Ala.  515. 

A  defendant  who  fails  to  appeal 
from  an  order  of  appointment  can- 
not afterwards  claim  that  the  ap- 
pointment was  irregular.  Saunders 
V.  Kempner  (Tex.  Civ.  App.)  32  S. 
W.  585. 

On  an  appeal  from  the  appoint- 
ment of  a  receiver,  all  irregularities 
not  brought  up  are  waived.  Tinkey 
V.  Langdon,  60  How.  Pr.  180. 

Pending  appeal  a  receiver  was  re- 
fused, no  danger  appearing.  Munic- 
ipal Comrs.  V.  Lockhart.  Ir.  Rep. 
3  Eq.  515. 

When  appeal  is  taken  from  an  or- 
der of  appointment,  and  supersedeas 
is  granted,  the  custody  does  not  pass 
to  the  receiver  pending  appeal.  Cook 
v.  Cole,  55  Iowa,  70. 

A  supersedeas  bond  on  appeal  un- 


MATTERS  RELATING  TO  THE  APPOINTMENT. 


§  22 


der  Mo.  Rev.  Stat.  1SS9,  §  2249,  from 
an  order  overruling  a  motion  to  va- 
cate the  appointment  of  a  temporary 
receiver  to  preserve  and  manage  a 
railway  line  pending  an  action,  re- 
leases the  property  that  has  reached 
the  hands  of  the  temporary  receiver 
by  way  of  execution  of  the  original 
order  of  appointment.  State,  St. 
Louis  cG  K.  R.  Co.,  v.  Eirzel,  137  Mo. 
435. 

An  order  appointing  a  receiver  will 
be  affirmed  where  an  appeal  is  taken 
by  one  having  no  interest  aif  ected 
thereby ;  but  such  affirmance  will  not 
bo  binding  upon  any  interested 
party.  Sherwood  v.  Prussing  (111. 
App.)    1  Chic.  L.  J.  Wkly.  179. 

An  attempted  appeal  to  the  Texas 
supreme  court  from  a  judgment  of 
the  Texas  court  of  civil  appeals  af- 
firming a  judgment  so  far  as  it 
grants  a  divorce,  but  reversing  and 
remanding  the  case  for  a  new  trial 
as  to  property  rights,  does  not  de- 
prive the  trial  court  of  jurisdiction 
to  appoint  a  receiver   of   the   prop- 


erty, even  if  an  effectual  appeal 
would  have  that  result,  since  the 
jurisdiction  of  the  court  of  civil  ap- 
peals is  final  as  to  both  branches  of 
the  case.  Stone  v.  Stone  (Tex.  Civ. 
App.)   43  S.  W.  567. 

On  appeal  to  review  the  appoint- 
ment of  a  receiver,  the  only  question 
to  be  considered  is  the  jurisdiction 
of  the  court  to  make  the  appoint- 
ment, and  not  whether  it  properly 
exercised  its  discretion.  State,  In- 
dependent Dist.  Teleg.  Co.  v.  Second 
Judicial  Dist.  Ct.  15  Mont.  324,  27 
L.  R.  A.  392. 

On  appeal  from  an  order  appoint- 
ing a  receiver  the  court  must  deter- 
mine whether  the  order  was  author- 
ized by  the  law  and  facts,  and  is  not 
limited  to  the  question  of  jurisdic- 
tion. Roberts  v.  Washington  Nat. 
Bank,  9  Wash.  12. 

On  appeal  the  court  will  not  dis- 
turb the  appointment  of  a  receiver 
where  the  evidence  is  conflicting  and 
there  is  no  abuse  of  discretion. 
Bliley  v.  Taylor,  86  Ga.  163. 


Page  72. — (1)   Appeal  from;  order;  rents  and  profits. 


In  a  foreclosure  suit  where  an  or- 
der appointing  a  receiver  was  super- 
seded by  a  bond  given  by  the  appel- 
lants to  account  for  rents  and  profits 
if  the  receivership  order  should  be 
affirmed,  the  court  may,  upon  an  or- 
der to  show  cause  issued  in  the  fore- 
closure case  after  such  affirmance, 
enter  a  judgment  against  the  appel- 
lants for  the  rents  and  profits  of  the 
premises  during  the  time  the  re- 
ceivership was  suspended.  Lowe  v. 
Riley  (Neb.)  77  N.  W.  758. 

Successor  to  dead  receiver. 

Where  the  order  appointing  a  re- 
ceiver is  in  force  the  refusal  to  ap- 
point a  successor  on  the  death  of  the 
first  is  error.  Smith  v.  Harris,  135 
Ind.  621. 

On  the  death  of  a  receiver  the  new 
receiver  will  be  authorized  to  con- 
tinue an  action  by  supplemental 
complaint.  Palmer  v.  Murray,  18 
How.  Pr.  545. 


On  the  death  of  a  receiver  the 
property  vests  in  the  court ;  and  on 
the  death  of  the  debtor  a  new  re- 
ceiver may  be  appointed.  Nicoll  v. 
Boyd,  90  N.  Y.  516. 

Validity;  not  heard  on  appeal,  when. 

Where  the  propriety  of  an  appoint- 
ment is  not  raised  in  the  court  below 
it  cannot  be  raised  on  appeal.  Bliley 
V.  Taylor,  86  Ga.  163. 

Who  may  attack. 

Irregularity  in  the  appointment  of 
a  receiver  is  not  to  be  raised  in  an 
action  by  the  receiver.  Orccu  v. 
Bookhart,  19  S.  C.  466. 

And  irregularity  in  the  appoint- 
ment is  no  ground  for  defendant's 
objecting  to  an  examination. 
Thomas  v.  Gartner,  97  Mich.  608; 
Cf.IJoicardv.  Palmer  (Mich.)  Walk. 
Ch.  391 

30 


§  28  RECEIVERSHIPS— SUPPLEMENT. 

Page  73,  sec.  23. — Bond;  sureties  on;  liability  on. 


Sureties  on  a  bond  reciting  the  ap- 
pointment of  the  principal  obligor 
as  receiver  of  a  corporation,  and  con- 
ditioned for  the  faithful  discharge  of 
his  duties  as  such,  are  estopped  to 
deny  his  appointment,  where  the 
riglit  of  the  court  to  make  the  ap- 
pointment existed,  although  the  ap- 
pointment at  the  time  was  improper 
because  of  the  insulficiency  of  the  pe- 
tition asking  therefor.  Thompson 
V.  Denner,  IC  App.  Div.  IGO,  Citing 
Cutler  V.  Dickinson,  8  Pick.  385; 
Distinguishing  Mittnacht  v.  Keller- 
mann,  105  N.  Y.  409. 

A  surety  on  a  receiver's  bond  who 
purchases  from  the  receiver,  for  a 
sum  much  less  than  its  real  value, 
the  real  estate  of  the  latter's  ccstuis 
que  trust,  which  he  has  no  lawful 
right  to  sell,  is  not  a  purchaser  of 
the  land  in  good  faith.  Donahue  v. 
Quackcnbush  (Minn.)  77  N.  W.  430. 

The  appointment  of  a  receiver 
without  requiring  a  bond  of  the  com- 
plainants is  invalid,  since  Ala.  act 
February  18,  1895,  providing  that  a 
bond  shall  be  required  of  the  com- 
plainant whenever  application  shall 
be  made  for  a  receiver,  repeals  by 
implication  Ala.  act  December  14, 
1894.  in  so  far  as  the  latter  invested 
the  appointing  officer  with  a  discre- 
tion in  the  matter  of  requiring  such 
bond.  David  v.  Levy  (Ala.)  24  So. 
589. 

An  independent  action  may  be 
maintained  to  ascertain  and  enforce 
the  liability  of  sureties  on  the  bond 
of  a  receiver.  Black  v.  Gentery,  119 
N.  C.  502. 

The  filing  of  a  bond  duly  approved, 
which  by  an  order  appointing  a  re- 
ceiver of  a  corporation  is  made  a  con- 
dition of  his  taking  possession  of  the 
property,  is  not  sufficiently  shown 
for  the  purposes  of  N.  Y.  Code  Civ. 
Proc.  §  082,  authorizing  any  person 
who  has  acquired  a  lien  upon  or  in- 
terest in  an  attachment  debtor's 
property  after  attachment  to  move 
to  vacate  or  modify  the  attachment, 
by  an  affidavit  of  such  filing  by  the 
managing  clerk  of  the  receiver's  at- 
torneys, which  does  not  disclose 
facts  or  circumstances  justifying  an 
26 


inference  that  he  had  personal 
knowledge  of  the  fact.  Belmont  v. 
Si(iua  Iron  Co.  12  App.  Div.  441. 

A  receiver's  bond  filed  in  the 
wrong  office  through  inadvertence 
may  be  properly  iiled  nunc  pro  tunc. 
Whiteside  v.  Prcndcrgast,  2  Barb. 
Ch.  471. 

As  to  liability  of  sureties  on  bond 
of  clerk  of  court  appointed  receiver, 
see  Syme  v.  Bunting,  91  N.  C.  48. 

Where  a  temporary  receiver  is  ap- 
pointed, and  subsequently  he  is  made 
permanent  receiver,  the  court  may 
require  further  bond,  but  if  the 
bond  is  not  so  required  his  acts  are 
legal.     Jones  v.  Blun,  145  N.  Y.  333. 

For  suits  on  receiver's  bond  which 
turned  wholly  on  a  question  of  plead- 
ing, see  Wilde  v.  Baker,  14  Allen, 
349;  Keg.  v.  Bayly,  1  Dru.  &  War. 
216. 

A  receiver  is  not  liable  on  his  bond 
until  he  has  failed  to  obey  some  or- 
der of  the  court.  State  v.  Gibson,, 
21  Ark.  140. 

Where  a  receiver's  surety  dies  or 
goes  abroad,  he  cannot  be  charged 
with  expense  of  new  appointment. 
Lane  v.  Townsend,  2  Ir.  Ch.  Rep. 
120. 

Sometimes  the  receiver  will  be  ap- 
pointed on  his  own  recognizance. 
Carlisle  v.  Berkley,  2  Ambl.  599; 
Ridout  V.  Plymouth,  1  Dick.  68. 

A  surety,  having  paid,  may  compel 
cosureties  to  contribute.  Ross  v. 
Williams,   11   Heisk.  410. 

Sureties  on  the  bond  of  a  clerk  are 
not  liable  for  funds  misappropriated 
by  him  as  receiver  over  which  the 
court  has  no  control.  State,  Rogers, 
V.  Odom,  86  N.  C.  432. 

A  receiver  under  N.  Y.  Laws  1853, 
918,  chap.  466,  §  24,  is  required  to 
give  security.  Mechanics'  F.  Ins. 
Go's  Case,  5  Abb.  Pr.  444. 

The  surety  of  a  receiver  is  liable 
for  interest  on  his  balances,  in  the 
discretion  of  the  court.  Re  Herrick, 
3  Ir.  Ch.  Rep.  183. 

A  receiver  and  his  sureties  are  lia- 
ble to  a  creditor  though  he  is  not 
named  in  the  bond.  Ross  v.  Will- 
iams, 11  Heisk.  410. 


RECEIVER'S  POWERS.  §§25,26 

Page  82,  sec.  25. — Source  of  power  of  receivers. 

(a)  (1)  Application  for  instructions. 


Morgell  v.  Royce,  2  Hogan,  235; 
People,  Atty.  Gen.,  v.  Security  L. 
Ins.  d  Annuity  Co.  79  N.  Y.  267. 

To  justify  the  receiver  in  apply- 
ing for  power  it  is  not  necessary  that 


the  power  to  lease  should  be  given  in 
the  order  of  appointment  or  that  it 
gives  liberty  to  apply  for  instruc- 
tions. Weeks  v.  Weeks,  106  N.  Y, 
626. 


Page  84:, — (c)   Power   of   statutoky   eeceivers. 


Statutory  receivers  of  railroads 
are,  to  some  extent,  state  agents,  and 
unless  acting  within  the  scope  of  au- 
thority the  state  is  not  liable  for 
their  acts.  Such  receivers  have  no 
power  to  contract  debts  to    be    paid 


otherwise  than  from  earnings.  State 
V.  Edgefield  d  K.  R.  Co.  6  Lea,  353. 
Statutory  receivers  are  to  some  ex- 
tent public  agents,  and  the  state  is 
bound  by  their  acts  when  within  the 
scope  of  authority,     Ihid. 


Page  81, — (d)   Power  being  limited  is  notice  to  all. 


Under  Sayles's  (Tex.)  Civ.  Stat. 
art.  1464,  a  receiver  cannot  as- 
sume powers  and  risks  not  within 
the  grant  or  control  of  the  court 
whose  agent  he  is.  International  & 
G.  X.  R.  Co.  V.  Wentworth,  8  Tex. 
Civ.  App.  5. 

A  receiver  appointed  in  an  action 
to  foreclose  a  mortgage  on  street- 
railway  property,  to  take  possession 
of  the  mortgaged  property  and  to 
operate  the  road,  has  no  authority 


to  collect  claims  due  the  company 
not  covered  by  the  mortgage.  Cali- 
fornia Title  Ins.  d  T.  Co.  v.  Consoli- 
dated Piedmont  Cable  Co.  117  Cal. 
237. 

One  who  contracts  with  a  receiver 
does  so  with  the  knowledge  that  for 
an  injury  received  he  can  get  re- 
dress only  by  leave  of  the  court, 
Vanderhilt  v.  Central  R.  Co.  43  N, 
J,  Eq,  669, 


Page  85,  sec.  26, — Power  to  borrow  money. 


The  court  has  power  to  authorize 
receiver  to  borrow  money  and  make 
the  same  a  first  lien  on  property  in 
the  hands  of  the  receiver.  Blythe  v. 
Gibbons,  141  Ind.  332. 

The  borrowing  of  money  by  a  re- 
ceiver of  the  furniture  and  other  per- 
sonal property  in  a  hotel  may  be  au- 
thorized by  the  court  in  order  to 
prevent  the  closing  of  the  hotel  and 
the  loss  of  the  goodwill  of  its  busi- 
ness during  the  pendency  of  a  suit 
for  foreclosure.  Cake  v.  Mohun, 
1C4  U.  S.  311,  41  L.  ed.  448. 

Where  a  court  appoints  a  receiver 


of  oil  leases,  the  right  to  which  is  in 
litigation,  for  the  purpose  of  de- 
veloping the  property  for  the  bene- 
fit of  the  successful  claimant,  and 
permits  advances  to  be  made  to  him 
by  the  parties  to  aid  in  the  develop- 
ment, with  the  understanding  that 
the  amount  advanced  to  him  shall  be 
returned  to  the  unsuccessful  litigant 
in  case  the  amount  is  realized  from 
the  oil  produced,  it  will  order  a  re- 
turn of  the  advances  to  the  unsuc- 
cesssful  party  if  the  funds  warrant 
it.  Elk  Fork  Oil  d  Gas  Co.  v.  Jen- 
nings, 90  Fed.  Rep.  767. 

27 


§§  27—29  RECEIVERSHIPS— SUPPLEMENT. 

Page  87,  sec.  27. — Power  to  loan  money. 


Receiver  must  loan  receivership's 
funds  as  directed  by  the  court,  or  be- 
come responsible  in  case  of  loss, 
though  no  bad  faith  is  shown.  Cair 
V.  Morris,  85  Va.  21. 

The  court    is    prohibited    by    Ky. 


Civ.  Code,  §  308,  after  the  appoint- 
ment of  a  receiver  to  take  charge  of 
a  fund  in  controversy,  from  ordering 
it  to  be  loaned  out  against  the  pro- 
test of  a  claimant.  Vombs  v.  Breat- 
hitt County,  20  Ky.  L.  Rep.  1247. 


Page  88,  sec.  28. — Power  to  compromise  debts. 


The  authority  of  a  receiver  of  a 
mutual  insurance  company  under  R. 
I.  Gen.  Laws,  chap.  177,  §  28,  to  do 
all  acts  which  might  be  done  by  the 
corporation  that  may  be  necessary 
for  the  final    settlement    of    its    un- 


finished business  and  the  winding  up 
of  the  corporation,  includes  power  to 
contest  or  compromise  a  claim  which 
he  is  not  satisfied  is  just,  hisur- 
ance  Commissioners  v.  Commercial 
Mut.  Ins.  Co.  20  R.  I.  part.  1,  p.  7. 


Page  89,  sec.  29. — Counsel  for  receiver  and  compensation  of. 


Reasonable  allowance  for  plain- 
tiffs' attorney,  on  bill  filed  for  dis- 
solution of  partnership  when  fund 
brought  into  court  for  benefit  of  cred- 
itors by  receiver, — see  Payne  v.  Mc- 
^^amara,  9  Ohio  C.  C.  132. 

Factors  who,  after  receiving  a  con- 
signment, are  enjoined  from  dispos- 
ing of  it,  at  the  instance  of  a  receiver 
of  the  consignor,  are  not  entitled  to 
charge  the  counsel  fees  expended  in 
defending  their  title  to  the  property, 
to  tlie  funds  in  the  receiver's  hands 
as  part  of  the  damages  caused  by 
the  injunction.  Fidelity  Ins.  Trust 
d  S.  D.  Co.  V.  Roanoke  Iron  Co.  91 
Fed.  Rep.  19. 

Fees  of  counsel  for  a  receiver  in 
sustaining  his  own  charges  should 
be  disallowed,  as  success  would  tend 
to  deplete,  and  not  pi'otect,  assets  in 
the  hands  of  the  receiver.  Soicles  v. 
'Sational  Union  Bank,  82  Fed.  Rep. 
139. 

Fees  of  counsel  for  a  receiver 
should  not  be  allowed  for  the  con- 
duct of  the  cause  in  which  the  receiv- 
er was  appointed,  as  counsel  fees  can 
be  chargeable  to  him  only  for  secur- 
ing the  assets.     Ibid. 

Counsel  employed  by  one  other 
than  the  receiver  of  a  corporation  to 
aid  in  resisting  a  motion  to  remove 
the  receiver  is  not  entitled  to  com- 
pensation out  of  the   corporate  ef- 

28 


fects,  where  the  receiver  had  counsel 
who  appeared  for  him  in  resistance 
of  the  motion.  Anderson  v.  Fidelity 
fC  D.  Co.  100  Ga.  739. 

Services  of  attorneys  for  the  re- 
ceiver of  an  employers'  liability  in- 
surance company,  rendered  in  de- 
fending against  claims  against  em- 
ployers holding  policies  tlierein  in- 
demnifjing  them  against  such 
claims,  and  giving  the  company  the 
right  to  take  full  charge  of  the  de- 
fense against  them,  are  rendered  for 
the  protection  and  benefit  of  all  the 
policy-holders,  so  that  the  receiver 
is  entitled  to  pay  for  them  out  of  the 
fund  in  his  hands.  Ross  v.  Ameri- 
can Employers'  Liability  Ins.  Co. 
50  N.  J.  Eq.  41. 

Creditors  who  come  in  to  take  the 
benefit  of  a  litigation  begun  by  one 
of  the  creditors  of  an  insolvent  cor- 
poration to  reach  funds  belonging  to 
it  will  not  be  permitted  to  defeat  the 
right  of  the  complainant's  solicitors 
to  payment  out  of  the  fund  distrib- 
uted to  the  creditors,  for  services 
rendered,  even  after  appointment  of 
a  receiver,  if  it  was  the  duty  of  such 
solicitors  to  protect  the  fund  against 
unfounded  claims,  and  their  efforts 
were  successful  in  defeating  claims, 
the  benefit  of  which  went  to  the  cred- 
itors. Burdon  Central  Sugar  Ref. 
Co.  v.  Murphy,  58  U.  S.  App.  1G6,  31 


RECEIVER'S   POWERS. 


29 


C.  C.  A.  233,  sub  nom.  Burdon  Cen- 
tral Sugar-Ref.  Co.  v.  Ferris  Sugar 
Mfg.  Co.  87  Fed.  Rep.  810. 

Attorneys'  fees  in  sustaining  the 
receiver's  appointment  is  a  proper 
charge  for  expenses.  Kim  merle  v. 
Dowagiac  Mfg.  Co.  105  Mich.  640. 

An  order  to  a  receiver  to  pay  "la- 
borers and  employees  for  labor  and 
services,  etc.,  includes  professional 
services  of  counsel.  Gurney  v.  At- 
lantic d-  G.  W.  R.  Co.  58  N.  Y.  358. 

Counsel  fees  should  be  an  annual 
allowance.  Boston  Safe  Deposit  & 
T.  Co.  V.  Chamberlain,  25  U.  S.  App. 
251,  60  Fed.  Rep.  847,  14  C.  C  A.  363. 

An  agreement  between  a  receiver 
whose  compensation  is  fixed  by  the 
court,  and  his  attorney,  whereby  the 
latter  is  to  get  only  half  of  the  at- 
torney's fees  stipulated  for  in  the 
obligations  on  which  he  may  bring 
suit  for  the  receiver,  inures  to  the 
benefit  of  the  debtors,  and,  if  known 
to  them,  is  available  as  a  defense  pro 
tanto,  and,  if  unknown  to  them, 
may  be  made  the  basis  of  a  direct 
proceeding  to  set  aside  a  judgment 
including  the  full  amount  of  such 
fees.  Hammond  v.  Atlee,  15  Tex. 
Civ.  App.  267. 

An  allowance  of  only  $1,000  to  a 
receiver  for  services  of  counsel  ex- 
tending over  thirteen  months,  con- 
sisting of  advice  required  in  the 
proper  performance  of  his  duties, 
and  applications  to  the  court  as  to 
the  payment  of  dividends,  and  serv- 
ices in  adjudications  determining  the 
liability  of  funds  in  his  hands  for 
certificates  of  profits  amounting  to 
about  $38,000, — is  insufficient.  Re 
New  York  Mut.  Ins.  Co.  17  App.  Div. 
633. 

A  fund  in  the  hands  of  a  receiver 
of  a  corporation,  representing  the 
proceeds  of  a  judgment  obtained  by 
it,  is  not  subject  to  the  lien  of  an  at- 
torney for  services  rendered  general- 
ly to  the  corporation  at  its  request, 
but  not  in  the  action  in  which  the 
judgment  was  obtained.  Anderson 
v.  E.  De  Braekeleer  &  Co.  25  Misc. 
343,  Confirming  Referee's  Report  in 
28  N.  Y.  Civ.  Troc.  Rep.  306. 

A  receiver  of  an  insolvent,  who  is 
also  an  attorney  at  law,  will  be  al- 
lowed counsel  fees  only  for  services 
requiring  special  legal  skill,  as  he  ia 


under  obligation  to  perform  such 
duties  in  respect  to  the  trust  as  an 
ordinarily  competent  business  man 
is  presumed  to  be  capable  of  perform- 
ing. Olson  V.  State  Bank  (Minn.) 
75  N.  W.  378. 

An  intervention  by  a  debtor  in  a 
judgment  in  favor  of  a  receiver,  in 
an  application  by  the  attorney  of  the 
receiver  to  have  the  attorney's  fees 
fixed  and  allowed,  whereby  such 
debtor  seeks  to  reduce  the  judgment 
by  one  half  of  the  attorney's  fees  in- 
cluded therein,  which  the  attorney 
had  agreed  to  allow  the  receiver  to 
retain,  is  a  direct  proceeding  within 
the  rule  that  a  judgment  may  be  as- 
sailed in  a  direct  proceeding  for 
fraud  or  accident  preventing  the 
party  from  availing  himself  of  a 
valid  defense,  where  the  court  is  the 
same  which  rendered  the  judgment, 
and  has  jurisdiction  of  all  the  par- 
ties interested  and  control  of  the 
funds.  Hammond  v.  Atlee,  15  Tex. 
Civ.  App.  267. 

A  counsel  fee  and  a  proportionate 
part  of  the  expenses  of  an  account- 
ing by  a  receiver  of  a  corporation 
are  properly  charged  against  a  fund 
realized  from  collateral  pledged 
with  the  corporation  to  secure  the 
performance  of  a  contract  with  it, 
which  was  completed  on  behalf  of  the 
corporation  by  the  receiver,  where 
such  expenses  were  rendered  neces- 
sary by  the  denial  of  his  right  to  de- 
duct the  expenses  of  completing  the 
contract  from  such  fund.  Re  A.  E. 
Chasmar  d  Co.  22  Misc.  680. 

An  attorney  employed  by  a  corpo- 
ration without  leave  of  court  to  re- 
sist claims  against  the  receiver  of  the 
corporation  who  has  all  the  assets 
of  the  corporation  in  his  hands, 
whose  services  availed  nothing,  is 
not  entitled  to  compensation  out  of 
the  funds  in  the  hands  of  the  re- 
ceiver. Anderson  v.  Fidelity  d  De- 
posit Co.  100  Ga.  739. 

No  allowance  should  be  made  upon 
the  accounting  of  a  receiver  for  ser- 
vices of  counsel  in  obtaining  the  ap- 
pointment of  a  former  receiver  who 
is  superseded.  Sotoles  v.  National 
Union  Bank,  82  Fed.  Rep.  139. 

From  what  paid. 
Counsel  fees  not  for  services  in  be- 

29 


30 


RECEIVERSHIPS— SUPPLEMENT. 


half  of  a  trust,  but  in  opposition,  are 
not  payable  out  of  funds  in  hands  of 
receivers.  Com.  v.  Mechanics  Mut. 
F.  Ins.  Co.  122  Mass.  421. 

The  attorney  of  an  intervening 
creditor  in  sequestration  proceedings 
against  an  insolvent  corporation  for 
wliicii  a  receiver  was  appointed  pur- 
suant to  Minn.  Gen.  Stat.  1894,  chap. 
76,  is  not  entitled  to  payment  for 
his  services  out  of  the  corporate  as- 
sets in  tiie  hands  of  the  receiver,  al- 
though the  attorney  brought  the  resi- 
dent stockholders  into  court  for  the 
purpose  of  enforcing  their  statutory 
liability,  where  the  latter  made  up  a 
fund  to  the  amount  of  their  unpaid 
stocK  subscriptions,  with  which  they 
paid  or  compromised  the  corporate 
debts.  lie  Northern  Trust  Co. 
(Minn.)   77  N.  W.  219. 

A  Federal  court  cannot  authorize 
its  receiver  to  pay  out  of  the  funds 
in  his  hands,  as  part  of  the  costs  in 
the  suit,  counsel  fees  contracted  for 
by  a  receiver  appointed  by  a  state 
court  over  the  same  property.  Amer- 
ican Loan  d  T.  Co.  v.  South  Atlantic 
&  0.  R.  Co.  81  Fed.  Rep.  62. 

Hot  entitled  to  priority,  when. 

An  attorney  employed  by  a  re- 
ceiver of  an  insolvent  railroad  com- 
pany appointed  by  a  Federal  court 
to  defend  suits  brought  in  such  court 
against  the  company  for  claims  for 
right  of  way  taken  by  the  company 
is  not  entitled  to  priority  for  the  rea- 
sonable value  of  his  services  in  such 
suits,  in  a  general  creditors'  bill  in  a 
state  court  against  the  company, 
where  the  Federal  court  did  not  have 
jurisdiction  because  it  did  not  have 
the  custody  of  the  asssets  of  the  com- 
pany' or  the  right  to  sell  the  same; 
but  such  claim  may  be  allowed  as  a 
debt    against    the    company    on    an 


equality  with  other  claims,  where 
other  creditors  do  not  object  thereto, 
although  the  receiver  appointed  by 
the  state  court  does  object,  where 
the  order  appointing  him  delines  his 
duties,  and  such  objection  does  not 
fall  within  the  same.  Crosby  v. 
Murristuwn  d  C.  G.  li.  Co.  (Tenn. 
Ch.  App.)   42  S.  VV.  507. 

Attorneys  for  an  insolvent  corpo- 
ration are  not  entitled  to  be  paid  as 
preferred  creditors  of  the  corpora- 
tion for  services  performed  before 
the  commencement  of  proceedings  for 
the  appointment  of  a  receiver,  al- 
though he  continues  their  employ- 
ment after  his  appointment.  Re 
Montgomery  (N.  J.  Eq.)  30  Chicago 
Leg.  News,  237. 

By  whom  appointed;  corr/pensation. 

A  receiver  has  no  right  to  employ 
counsel  without  the  consent  of  the 
court.  When  appointed,  the  court  de- 
termines their  charges.  Walsh  v. 
Raymond,  58  Conn.  251. 

Who  employed. 

A  receiver  in  supplementary  pro- 
ceedings may  employ  the  attorney 
of  the  party  for  whose  benefit  the 
proceedings  are  instituted.  Baker 
V.  Van  Epps,  00  IIow.  Pr.  79. 

Counsel  for  either  party  are  not 
employed  as  a  rule,  but  it  is  only 
when  tlie  receiver  is  acting  adversely 
to  one  or  the  other  that  the  rule  ap- 
plies, flynes  v.  McDermott,  14 
Daly,  104. 

Independent  counsel  for  a  receiver 
should  be  appointed.  Emmons  v. 
Davis  d  D.  Pottery  Co.  (N.  J.  Eq.) 
16  Atl.  157. 

Case  referred  to  master  to  ascer- 
tain whether  there  was  a  valid  claim 
for  counsel  fees.  People  v.  E.  Rem- 
ington d  Sons,  45  Hun,  347. 


Page  91j  sec.  30. — Power  to  sue. 


Power  of  a  receiver  to  convert 
property  into  money  and  distribute 
the  same  conveys  the  implied  power 
to  manage  and  preserve.  Vander- 
bilt  V,  Central  R.  Co.  43  N.  J.  Eq. 
069. 

Mo.  Rev.  Stat.  §§  551,  2193,  2194, 

80 


confer  no  authority  on  a  receiver  of 
an  insolvent  corporation  to  prosecute 
actions  for  damages  for  the  miscon- 
duct of  directors.  A  court  of  equity 
under  its  general  power  may  do  so. 
Thompson  v.  Greeley,  107  ^lo.  577. 
Where  the  judgment  debtor  is  in. 


RECEIVER'S  POWERS. 


§§  31—33 


possession  of  property  as  agent  of  a 
tliird  person  who  owns  by  paper  title 
apparently  good,  it  is  improper  to 
order  a  delivery  to  the  receiver.  The 
receiver  in  such  case  must  sue.  Rod- 
man  v.  Henri/,  17  X.  Y.  482. 

A  receiver  of  anotner's  personal 
property,  with  power  to  take,  col- 
lect, recover,  and  sequester  all  the 
rents  and  profits  of  his  real  estate, 
and  to  sell  and  dispose  of  his  person- 
al estate,  has  no  authority,  after  bid- 
ding in  the  pi-operty  at  a  sale  under 
an  execution,  to  sell  it  while  acting 
in  his  fiduciary  capacity  as  receiver. 
Donahue  v.  Quackenbush  (Minn.) 
77  K  W.  430. 

A  receiver  of  a  corporation  ap- 
pointed in  another  state  should  not 
be  allowed,  by  an  exercise  of  comity, 
to  sue  for  the  enforcement  of  the  li- 
ability of  stockholders,  when  it 
would    be    in  contravention    of  the 


rights  of  the  citizens  of  the  state, 
and  operate  to  their  injury.  Wy- 
man  v.  Eaton,  107  Iowa,  214,  43  L. 
R.  A.  695. 

A  receiver  of  a  building  and  loan 
association,  empowered,  ordered,  and 
directed  by  the  court  to  collect  all 
claims  due  to  such  association,  by 
suit  or  otherwise,  has  authority  to 
bring  an  action  to  foreclose  a  mort- 
gage due  to  the  association.  Hat- 
field v.  Cummings,  152  Ind.  280. 

Poicer  to  vote  stock. 

Where  a  receiver  has  been  ap- 
pointed under  a  creditors'  bill,  the 
court  may  order  the  defendant  to  ex- 
ecute a  proxy  or  power  of  attorney 
to  enable  the  receiver  to  vote  the 
stock  of  the  corporation,  over  which 
he  is  appointed  at  the  meeting  of 
stockholders.  Atkinson  v.  Foster,  27 
111.  App.  63. 


Page  93,  sec.  31. — Power  to  make  repairs. 


A  receiver  in  charge  of  a  railroad 
will  not  be  prevented  from  renewing 
the  piling  supporting  a  bridge  across 
a  stream,  at  the  suit  of  county  com- 
missioners, on  the  ground  that  the 
piling  interferes  with  the  flow  of  the 
water,  if  there  is  a  county  bridge  25 
feet  above  the  railroad  bridge,  un- 
der which  the  clear  space  is  only  one 
half  as  great  as  under  the  railroad 
bridge,  while  the  piling  is  not  shown 
to  interfere  with  the  flow  of  water. 
Van  'Wert  County  v.  Peirce,  90  Fed. 
Rep.  764. 

The  receivers  of  a  railroad  com- 
pany appointed  by  an  order  dii'ect- 
ing  them  to  continue  the  operation 


of  the  company  as  it  had  been  oper- 
ated, keep  the  premises  and  property 
in  good  condition  and  repair,  and  at 
their  discretion  carry  out  any  and 
all  contracts  that  the  company  ha3 
made,  and  renew  the  same,  have  au- 
thority, without  further  orders  of 
the  court,  to  continue  contracts  for 
the  rental  and  repair  of  cars  pre- 
viously entered  into  by  the  company. 
Mercantile  Trust  &  D.  Co.  v.  South- 
ern Iron  Car  Line  Co.  113  Ala.  543. 

An  order  to  change  the  location  of 
a  railroad  and  build  a  bridge  should 
be  made  only  on  report  of  the  master 
showing  the  necessity.  Hand  v.  Sa- 
vannah &  C.  R.  Co.  10  S.  C.  N.  S.  406. 


Page  94,  sec.  32. — Power  to  purchase  supplies,  labor,  etc. 


Where  a  receiver  is  appointed  to 
run  a  hotel  and  make  such  purchases 
as  may  be  necessary,  he  has  implied 
authority  to  purchase  on  a  credit,  in 
the  absence  of  any  provision  in  the 


order  of  appointment.  Highland 
Ave.  &  B.  R.  Co.  v.  Thornton,  105 
Ala.  255;  cf.  Thornton  v.  Highland 
Ave.  d  B.  R.  Co.  94  Ala.  353. 


Page  96,  sec.  33. — Power  to  continue  business. 


A  receiver  appointed  on  the  ap- 
plication of  a  subscriber  to  secure 
the   location   of   a  factory,   for   the 


purpose  of  protecting  the  intorosts 
of  tlie  subscriber,  sliould  not  bo  au- 
thorized   to    continue    the    business 

81 


§34 


RECEIVERSHIPS— SUPPLEMENT. 


generally,  but  only  to  collect  debts 
and  protect  the  property.  Vance  v. 
Shiawassee  Circuit  Judge,  102  Mich. 
342. 

In  an  action  to  restrain  an  insol- 
vent defendant  from  miuin<i  for  gold 
upon  the  land  of  the  plaintifT,  the 
receiver  appointed  to  beat  out  the 
ore  already  taken  out,  and  prevent 
its  waste,  will  not  be  diroetod  to  con- 
tinue the  mining  operations  on  his 
own  account,  where  such  an  order  is 
not  necessary  to  preserve  the  prop- 
erty or  to  maintain  the  rights  of  the 
parties.  Bigbce  v.  Suinmerour,  101 
Ga.  201. 

Poiccr  to  operate  a  railroad. 

The  express  power  given  by  N.  J. 


act  Feb.  11,  1874,  to  operate  a  rail- 
road for  the  use  of  the  public,  is  not 
conferred  on  the  receiver  as  an  inde- 
jundcnt  person,  but  as  an  olllccr  of 
court.  Vanderbilt  v.  Central  li.  Co. 
43  N.  J.  Eq.  (i(J!). 

The  order  of  April  5,  1894,  direct- 
ing a  schedule  of  wages  to  be 
adnptcd  by  tlu;  receivers  of  the  Union 
racilic  Kailroad  Company,  did  not 
l)revent  them  from  making  changes 
in  the  train  service  or  exercising 
their  discretion  in  the  operation  of 
the  railroad,  altliough  a  little  more 
service  is  required  of  the  trainmen, 
where  no  unjust,  unreasonable,  or 
excessive  service  is  required.  Dex- 
ter V.  Union  P.  R.  Co.  75  Fed.  Rep. 
947. 


Page  98,  sec.  34. — Power  to  sell. 


Failure  to  give  notice  to  the  attor- 
ney general,  as  required  by  the  New 
York  statute,  of  an  application  to 
sell  land,  is  cured  by  a  confirmation 
of  the  sale.  Johnson  v.  Rayner,  25 
App.  Div.  598. 

Purchaser,  no  setoff. 

The  purchaser  at  a  receivers'  sale 
has  no  right  of  setoff  against  the  re- 
ceiver for  money  due  from  him  indi- 
vidually. Polk  V.  Carver  Coal  & 
Min.  Co.  91  Iowa,  570. 

Refusal  of  court  to  extend  time  not 
reviewable. 

The  discretion  of  the  court  in  not 
extending  the  time  of  payment  for 
goods  sold  at  receivers'  sale  is  not  re- 
viewable. Alvord  v.  Strickler,  10 
Colo.  89. 

A  sale  by  a  receiver  appointed  in 
proceedings  supplementary  to  a 
judgment  against  a  corporation 
passes  no  title.  Conner  v.  Todd,  48 
N.  J.  L.  361. 

Expense  of  sale  deducted  before  cred- 
its. 

A  chattel  mortgagee  will  not  be  re- 
quired to  credit  on  his  mortgage  the 
entire  proceeds  of  a  sale  of  the  mort- 
gaged property  by  a  receiver  under 
an  order  directing  the  receiver  to 
make  the  sale  and  the  mortgagee  to 
32 


apply  the  proceeds  to  the  payment  of 
the  mortgage,  but  only  the  balance 
of  such  proceeds  after  deducting  ex- 
penses properly  incurred  in  hand- 
ling and  taking  care  of  the  mort- 
gaged property,  including  amounts 
paid  to  watchmen  and  for  insurance 
while  awaiting  an  opportunity  to 
sell,  and  also  the  expense  of  loading 
the  property  for  transportation. 
Hughes  v.  Edisto  Cypress  Shingle  Co. 
47  S.  C.  1. 

Power  of  the  court  to  order  sale. 

The  court  has  no  power  to  direct 
the  sale  of  real  estate  free  from  judg- 
ment liens.  Re  Lebanon  Brewing 
Co.  3  Pa.  Dist.  R.  200;  Foster  v. 
Barnes,  81  Pa.  377. 

Receiver  protected  in  making  sale. 

A  receiver  duly  appointed  is  pro- 
tected in  the  sale  of  property  in  his 
possession;  and  he  is  not  a  tres- 
passer, nor  is  the  plaintiff.  Walling 
V.  Miller,  108  N.  Y.  173. 

Sale  is  judicial. 

A  sale  by  a  receiver  of  a  national 
bank  is  a  judicial  sale.  Re  Third 
Is'at.  Bank,  9  Biss.  535. 

Purchaser  protected. 
The  president  of  a  corporation  who 
as  such  joins  in  the  e.\.ecution  of  a 


RECEIVER'S  POWERS. 


§34 


mortgage  to  secure  several  notes 
payable  to  the  mortgagee,  who  is  not 
stated  therein  to  hold  them  in  trust, 
is  estopped,  as  against  good-faith 
purchasers  from  one  who  purchased 
the  mortgaged  property  in  good 
faith  at  a  sale  by  the  receiver  of  the 
corporation,  to  claim  that  one  of 
such  notes  belonging  to  him  was  still 
secured  by  the  mortgage  because  it 
was  not  included  at  the  sale,  where 
he  had  due  notice  of  the  appointment 
of  the  receiver  and  of  the  sale,  which 
was  advertised  to  be  free  from  en- 
cumbrances. Brown  v.  Union  De- 
pot mreet  R.  Co.  65  Minn.  508. 

Credit  on  purchase  price. 

A  purchaser  at  a  sale  by  an  as- 
signee and  receiver  in  insolvency  un- 
der the  Mississippi  statute,  which 
was  made  with  the  understanding 
that  all  prior  liens  were  to  be  dis- 
charged by  the  purchase  price,  is  en- 
titled to  a  credit  for  the  amount  he 
has  been  obliged  to  pay  as  surety  on 
a  forthcoming  bond  given  by  the  re- 
ceiver to  secure  the  release  of  the 
property  from  attachment,  if  no  oth- 
er creditor  or  the  receiver  has  any 
claim  superior  to  that  of  the  attach- 
ing creditors;  but  if  there  are  such 
superior  claims  the  credit  must  be 
limited  to  the  balance.  Weems  v. 
Love  Mfg.  Co.  74  Miss.  831. 

Property  not  in  custodia  legis  after 
sale. 

ir'roperty  purchased  at  a  receiver's 
sale  is  not  in  custodia  legis,  so  as  to 
preclude  its  seizure  under  legal  proc- 
ess, merely  because  the  court  ap- 
pointing the  receiver  has  retained 
jurisdiction  for  the  purpose  of  seeing 
that  the  purchaser  pays  off,  satisfies, 
and  discharges  certain  claims  pend- 
ing and  undetermined  in  that  court. 
Farmers'  &  M.  Nat.  Bank  v.  Scott 
(Tex.  Civ.  App.)  45  S.  W.  26. 

To  save  franchise. 

The  property  involved  in  an  action 
by  creditors  to  set  aside  a  convey- 
ance of  the  property  and  franchises 
of  a  corporation  organized  to  con- 
struct a  public  bridge  is  in  danger  of 
being  lost,  so  as  to  justify  tlie  ap- 
pointment of  a  receiver  to  sell  the 


same  pending  the  action,  where  oth- 
erwise the  franchises  will  be  for- 
feited for  noncompletion  of  the 
bridge  within  the  required  time. 
Boston  Investment  Co.  v.  Pacific 
Short-Line  Bridge  Co.  104  Iowa,  311. 

When  may  object. 

A  banking  corporation  for  which 
a  receiver  has  been  appointed  to  wind 
up  its  affairs  under  the  provisions 
of  Neb.  Comp.  Stat.  chap.  8,  may  be 
heard  to  resist  an  application  for  an 
order  on  the  receiver  to  sell  its  real 
estate,  and  is  not  estopped  because 
it  consented  to  the  appointment  of 
the  receiver  in  the  first  instance, 
when  the  order  consented  to  did  not 
fix  the  terms,  conditions,  or  time  of 
sale.  State,  German  Sav.  Bank,  v. 
Fawcett  (Neb.)  78  N.  W.  636. 

Rescission;  effect  of. 

Upon  the  resale  of  property  sold 
by  a  receiver  acting  under  an  order 
of  the  court,  but  directed  resold  be- 
cause the  first  sale  was  improvident- 
ly  made  under  a  mistake  of  fact,  the 
first  purchaser  is  entitled  to  be  re- 
paid the  purchase  price  paid  by  him, 
and  interest  thereon,  and  his  reason- 
able costs  and  expenses  in  defending 
the  sale  made  to  him.  Horse  Springs 
Cattle  Co.  V.  Scho field,  9  N.  M.  — , 
49  Pac.  954.  Citing  Williamson  v. 
Dale,  3  Johns.  Ch.  293;  Duncan  v. 
Dodd,  2  Paige,  101. 

Purchaser  cannot  attack. 

The  purchaser  at  a  receiver's  sale 
is  estopped  from  asserting  the  in- 
validity of  receivers'  certificates  is- 
sued by  consent  of  all  parties  to  the 
suit,  and  used  in  preserving  the 
property.  Central  Trust  Co.  v. 
Sheffield  d  B.  Coal,  Iron  &  R.  Co.  44 
Fed.  Rep.  526. 

Sale  of  securities. 

A  sale  of  securities  by  a  receiver  is 
authorized.  Re  Newark  Sav.  Inst. 
(N.  J.  Eq.)  8  Cent.  Rep.  564. 

Sale  of  property  of  a  corporation. 

An  order  providing  for  a  receiv- 
er's sale  of  property  belonging  to  a 
corporation,  directing  him  to  retjuire 
of  the  purchaser  an  immediate  pay- 

33 


§34 


RECEIVERSHIPS— SUPPLEMENT. 


ment  of  $G,000,  and  then  to  accept 
the  first-niort^aj,'e  bonds  to  the  ex- 
tent of  $20,UU0,  and  tluit  the  '"bal- 
ance due  on  the  purchase  price"  lie 
shall  arrange  to  secure  witliin  thirty 
days,  requires  the  property  to  be 
sold  for  more  than  $2G.U00,  $20,000 
of  which  the  purchaser  has  the  priv- 
ilege of  paying  for  in  bonds,  but  is 
not  required  to  do  so.  Ulauyhtcr  v. 
IStrothcr,  99  Ga.  033. 

Order  for  sale;  ichcn  made. 

The  court  will  not  decree  a  sale  of 
property  l)y  a  receiver  until  a  party 
claiming  title  has  a  hearing.  Lane 
V.  Lutz,  1  Keyes,  203. 

Order  for  sale  set  aside,  when. 

An  order  which  authorized  a  re- 
ceiver to  sell  cattle,  based  upon  great 
and  material  errors  as  to  their  num- 
ber and  value,  will  be  set  aside  and 
a  resale  ordered,  although  the  receiv- 
er acted  under  a  mistake  of  fact. 
Horse  Iriprings  Cattle  Co.  v.  Scho- 
field  9  N.  M.  — ,  49  Pac.  954.  Cit- 
ing McGoicn  V.  Sandford,  9  Paige, 
290;  Broicn  v.  Frost,  10  Paige,  243; 
Anderson  v.  Foulke,  2  Harr.  &  G. 
355 ;  Blackburn  v.  Selma  R.  Co.  3 
Fed.  Rep.  689;  Deford  v.  Macicatty, 
82  JId.  108 ;  G-raffam  v.  Burgess, 
117  U.  S.  180,  29  L.  ed.  839;  Schroe- 
der  v.  Young,  161  U.  S.  337,  40  L.  ed. 
724. 

Receiver  appointed  to  make  sale. 

Marvine  v.  Drexel,  68  Pa.  362. 

Sale  to  pay  taxes. 

A  receiver  will  be  allowed  to  sell 
at  public  or  private  sale  the  person- 
al property  of  the  i-eceivership,  in  a 
state  where  overdue  taxes  constitute 
a  lien  which  must  be  first  paid  out 
of  the  proceeds,  and  pay  such  taxes 
as  quickly  as  possible  from  the  pro- 
ceeds. Fletcher  v.  Harney  Peak  Tin- 
Min.  Co.  84  Fed.  Rep.  555. 

As  a  whole,  when. 

The  court  may  appoint  a  receiver  of 
a  railroad  company  upon  a  cross  pe- 
tition by  a  lienholder  in  a  suit  to 
marshal  the  liens  and  sell  the  prop- 
erty, although  such  petition  is  filed 
after  a  decree  finding  the  priority  of 
34 


liens  and  ordering  sale  of  property 
levied  ujjon,  whore  no  sale  has  been 
made  for  want  of  bidders;  and  such 
receiver  may  be  directed  to  sell  the 
property  of  the  company  as  a  whole, 
where  the  whole  is  necessary  to 
carry  on  its  enterprise.  Mathers  v. 
Cincinnati  R.  Tunnel  Co.  12  Ohio  C. 
C.  136. 

Attack  of  sale;  ground  of. 

There  is  no  right  of  action  in  a 
corporation  to  recover  property  sold 
by  a  receiver  except  for  fraud.  New 
Castle  Northern  R.  Co.  v.  New 
Castle  &  8.  Valley  R.  Co.  152  Pa.  96. 

Attack  of  sale;  when  made. 
Relief  against  the  purchaser  at  a 
receiver's  sale,  charging  collusion 
with  the  receiver,  should  be  in  the 
action  when  the  receiver  is  ap- 
pointed. Lockwood  V.  Reese,  76 
Wis.  404. 

Ratification  of  sale. 

The  unauthorized  act  of  receivers 
of  a  corporation  appointed  in  pro- 
ceedings for  its  voluntary  dissolu- 
tion, in  making  a  sale  of  the  prop- 
erty on  an  order  granted  without  no- 
tice to  the  attorney  general,  is  rati- 
fied where  the  court,  on  the  full  dis- 
closure of  the  facts,  and  with  notice 
to  the  attorney  general,  approves 
and  confirms  the  sale.  Johnson  v. 
Rayner,  25  App.  Div.  598. 

Private  sale  ratified  if  assented  to 
by  all  parties  in  interest,  though 
the  decree  required  public  sale.  Yet- 
zer  V.  Applegate,  85  Iowa,  121. 

Sale  of  manufactured  products. 

A  receiver  authorized  to  operate 
a  plant,  and  sell  the  manufactured 
products,  and  pay  into  court  the  pro- 
ceeds above  the  cost  of  production, 
cannot  pay  the  operating  expenses 
from  the  money  received  from  the 
sale  of  real  estate  and  deprive  the 
wage  claimants  of  their  lien.  Gil- 
lespie V.  Blair  Glass  Co.  189  Pa.  50. 

Distribution  of  proceeds;  liens  first 
paid. 

The  proceeds  of  a  sale  by  a  receiv- 
er of  property  of  a  corporation,  on 
which  one  of  the  creditors  had  a  lien 
at    the    time   the   receiver   was   ap- 


RECEIVER'S  POWERS. 


34 


pointed,  and  the  amount  remaining 
of  such  proceeds  applicable  to  the 
lien  after  payment  of  expenses  and 
charges,  should  be  made  to  appear 
before  dividing  the  proceeds  of  the 
entire  corporate  property,  where 
the  proceeds  of  the  sale  of  all  the 
property  have  been  mingled  to- 
gether. Re  F.  X.  Muller  &  Co.  47  N. 
Y.  Supp.  277. 

What  sale  includes. 

A  receiver's  sale  of  all  assets  with- 
in the  jurisdiction  of  the  court  in- 
cludes debts  due  from  nonresidents. 
Loney  v.  Penniman,  43  Md.  130. 

Effect  of  sale  as  to  surety. 

Failure  of  a  receiver  in  selling 
property  under  a  decree  of  court,  to 
retain  a  lien  for  the  purchase  money 
as  authorized  by  statute  and  the  de- 
cree, will  not  release  a  surety  on  the 
note  given  for  the  purchase  money, 
since  the  surety  himself  will  be 
chargeable  with  neglect  in  failing  to 
see  that  the  lien  was  retained,  and 
the  receiver  was  under  no  affirmative 
duty  to  the  surety.  Joyce  v. 
Cockrill,  92  Fed.  Rep.  838. 

Judgment  creditors  of  an  insol- 
vent corporation,  who  permit  its 
property  to  be  sold  by  the  receiver 
subject  to  a  mortgage  given  by  the 
corporation  to  one  of  its  own  direct- 
ors, thereby  lose  their  right  to  object 
to  the  mortgage  on  that  ground,  and 
have,  after  the  confirmation  of  the 
sale,  no  right  to  have  such  mortgage 
set  aside  to  which  the  purchaser  at 
the  sale  can  be  subrogated.  Rich- 
ards V.  Haliday,  92  Fed.  Rep.  798. 

Effect  as  to  liens. 

A  sale  of  property  by  a  receiver  of 
a  corporation  does  not  in  Pennsyl- 
vania devest  the  lien  of  a  prior  mort- 
gage securing  bonds  of  the  corpora- 
tion, where  no  notice  has  been  given 
to  the  mortgagee  or  the  holder  of  the 
bonds  of  the  application  for  the  order 
to  sell.  Fidelity  Title  &  T.  Co.  v. 
Hchenley  Park  d  H.  R.  Co.  189  Pa. 
3G3. 

Subject  to  liens. 

A  sale  by  a  receiver  under  an  or- 
der not  mentioning  liens  is  subject  to 


the  liens.     Hackensack  Water  Co.  v. 
De  Kay,  36  N.  J.  Eq.  548. 

Whe7i  free  from  liens. 

A  purchaser  of  railroad  property 
from  one  who  purchased  at  a  sale  by 
a  receiver  takes  it  free  from  claims 
against  the  receiver,  unless  it  is  or- 
dered otherwise  by  the  terms  of 
sale.  Houston,  E.  d  W.  T.  R.  Co.  v. 
Noi-ris  (Tex.  Civ.  App.)  41  S.  W. 
708. 

When  void. 

A  sale  of  assets  of  an  insolvent 
firm  by  the  receiver  thereof,  without 
other  authority  than  that  contained 
in  a  decree  which  requires  him  to  sell 
such  assets  on  a  certain  day,  is  not 
merely  irregular,  but  absolutely 
void.  Ackerman  v.  Ackerman,  50 
Neb.  54. 

A  sale  by  a  receiver  in  collusion 
with  the  insolvent  debtor  is  void  as 
to  creditors,  and  the  receiver  is  li- 
able for  the  full  value  of  the  prop- 
erty. An  ex  parte  order  confirming 
such  sale  will  be  set  aside.  Re  Shea, 
57  Minn.  415. 

When  voidable. 

A  party  cannot  complain  of  a  pur- 
chase by  a  receiver  as  an  individual 
of  what  he  sold  as  receiver,  or  his 
purchase  as  receiver  of  what  he  sold 
as  an  individual,  where  he  consented 
beforehand  to  such  transaction  and 
it  was  clearly  for  the  benefit  of  the 
trust  property.  Patterson  v.  Ward, 
6  N.  D.  609. 

A  purchase  by  a  receiver,  as  agent 
of  another,  of  property  sold  at  his 
own  sale,  made  under  order  of  court, 
is  voidable  at  the  election  of  a  party 
having  a  beneficial  interest  in  the 
property.  Carr  v.  Houser,  46  Ga. 
477. 

Who  are  bound  by  sale. 

An  agreement  by  the  receiver  of 
an  insolvent  corporation  to  retain 
from  the  proceeds  of  a  sale  of  the 
corporate  property  an  amount  suffi- 
cient to  pay  city  taxes  due  from  the 
corporation,  in  order  to  induce  the 
city  to  refrain  from  attacking  as 
fraudulent  a  transfer  of  the  property 
by  the  corporation,  and  to  induce  the 
purchaser  to  make  the  purchase,  is 

35 


S  34 


RECEIVERSHIPS— SUPPLEMENT. 


binding  upon  the  creditors  of  the  cor- 
poration for  wliom  the  receiver 
acted,  and  wlio  were  desirous  that 
the  sale  should  be  made,  so  long  as 
they  retain  the  benefits  of  the  sale, 
even  though  the  receiver  exceeded 
his  authority  in  making  such  agree- 
ment. Union  Tiust  Co.  v.  Mabley, 
113  Mich.  478. 

When  made. 

A  sale  of  personal  property  may 
be  ordered  before  the  rights  of  par- 
ties are  determined,  but  not  so  of  real 
estate.  Cole  v.  M'llae,  6  Rand.  (Va.) 
644. 

The  leave  of  the  court  to  sell  real 
property  of  an  insolvent  corporation 
in  the  hands  of  a  receiver,  under  an 
execution  on  a  judgment  recovered 
before  his  appointment,  is  implied 
by  its  unqualified  refusal  to  continue 
an  injunction  against  the  sale.  Pel- 
letier  v.  Greenville  Lumber  Co.  123 
N.  C.  59G. 

The  court  may  properly  order  an 
immediate  sale  of  the  property  and 
franchises,  in  a  suit  to  set  aside  a 
conveyance  by  a  corporation,  in  or- 
der to  prevent  a  forfeiture  of  fran- 
chises. Boston  Investment  Co.  v. 
Pacific  Short-Line  Bridge  Co.  104 
Iowa,  311. 

An  exception  by  a  purchaser  to  the 
confirmation  of  a  private  sale  of  the 
chattels  and  leasehold  estate  of  a 
corporation  by  its  receiver,  on  the 
ground  that  two  attachments  were 
levied  upon  the  property  before  it 
went  into  the  receiver's  hands,  is 
properly  overruled  where  the  court 
ordered  the  receiver  to  settle  with 
the  attaching  creditors.  Brook- 
field  V.  Sharpe   (Md.)   41  Atl.  1072. 

The  court  may  in  a  proper  case 
permit  a  sale  of  real  property  of  an 
insolvent  corporation  in  the  hands  of 
a  receiver,  under  an  execution  issued 
upon  a  valid  judgment  recovered  be- 
fore the  receiver's  appointment.  Pel- 
letier  v.  Greenville  Lumber  Co.  123 
N.  C.  596. 

How  made. 

An  order  to  sell  the  business  and 
all  personal  property  as  a  whole  is 
erroneous  and  not  calculated  to  sell 
the  property  to  the  best  advantage. 
Case  V.  Fish,  63  Wis.  475,  497. 
86 


Hoio  enforced. 

A  sale  by  a  receiver  of  a  judgment 
as  an  asset  may  be  enforced  by  spe- 
cific perf<>rmance.  Jie  Dc7iison,  114 
N.  Y.  02 1. 

Expenses  paid  by  purchaser,  when. 

A  court  which,  in  decreeing  the 
sale  of  a  railroad  in  possession 
of  a  receiver,  requires  the  pur- 
chaser, who  is  a  mortgagee,  to  pay 
the  expenses  of  the  receivership  as 
part  of  the  purchase  price,  and  gives 
lienlioklers  the  right  to  resort  to 
property  not  covered  by  the  liens  for 
deficiency,  will  be  held  to  have  in- 
tended that  the  claims  against  the 
receivership  should  be  extinguished 
by  payment,  where  to  permit  the 
purchaser  to  hold  them  as  claims 
against  the  property  would  enable  it 
to  appropriate  the  whole  of  the  prop- 
erty not  subject  to  liens,  to  the  ex- 
clusion of  other  lien  claimants.  Mor- 
gan's L.  &  T.  R.  &  H.  S.  Co.  v.  Moran, 
91  Fed.  Rep.  22,  33  C.  C.  A.  313. 

Reservation  of  jurisdiction,  upon 
ordering  a  railroad  in  the  hands  of  a 
receiver  to  be  turned  over  to  the  pur- 
chaser at  foreclosure  sale,  for  the 
purpose  of  enforcing  payment  of  all 
the  receiver's  liabilities,  will  include 
power  to  hear  and  determine  ques- 
tions touching  the  receiver's  liabil- 
ity for  injuries  caused  by  the  receiv- 
er's mismanagement  or  negligence. 
Central  Trust  Co.  v.  Colorado  M.  R. 
Co.  (C.  C.  D.  Colo.)  1  Denver  Legal 
Adv.  496. 

Purchaser  not  liable  when. 

The  purchaser  at  a  judicial  sale  is 
not  liable  on  a  contract  by  the  re- 
ceiver for  supplies,  and  may  assume 
or  repudiate  the  same.  Sloss  Iron 
d  S.  Co.  V.  South  Carolina  dc  G.  R. 
Co.  42  U.  S.  App.  748,  85  Fed.  Rep. 
133,  29  C  C.  A.  50. 

Purchase  by  receiver. 

A  purchase  by  the  receiver  at  his 
own  sale,  as  agent  of  another,  is  void- 
able at  the  election  of  a  party  in  in- 
terest.    Carr  v.  Houser,  46  Ga.  477. 

A  sale  to  a  receiver  of  property 
over  which  he  is  appointed  will  not 
be  upheld.  Eyre  v.  McDonnell,  15  Jr. 
Ch.  Rep.  534. 


RECEIVER'S  POWERS. 


§§  36-38 


A  receiver  cannot,  without  special 
leave  of  the  court,  become  the  pur- 
chaser of  lands  over  which  he  is  re- 


ceiver.    Alven  V.   Bond,  Flan.  &  K. 
196,  3  Ir.  Eq.  Rep.  365. 


Page  104,  sec.  36. — Power  to  lease. 


The  court  may  order  receiver  to 
take  a  lease  of  another  road,  or  even 
order  him  to  build  another,  if  neces- 
sary for  the  preservation  and  pro- 
tection of  the  property.  Gilbert  v. 
Washington  City,  V.  M.  tC-  G.  8.  R. 
Co.  33  Gratt.  586. 

Reference  to  master  to  determine 
if  receiver  should  lease.  Gibbons  v. 
Hoivell,  3  Madd.  469. 

The  court  has  power  to  authorize 
a  receiver  in  a  partition  proceeding 
to  lease  the  property.  Weeks  v. 
Weeks,  106  N.  Y.  626. 

Statutory  receivers  have  no  power 
to  lease  the  railroad  over  which  they 


are  appointed;  nor  can  such  a  lease 
be  ratified.  State  v.  McMinnville 
&  M.  R.  Co.  6  Lea,  369. 

The  court  refused  to  authorize  a 
receiver  to  surrender  a  lease  and 
make  a  new  one  for  less  rent.  Duty 
of  receiver  to  advertise  for  tenant, 
etc.  Lorillard  v.  Lorillard,  4  Abb. 
Pr.  210. 

The  court  has  no  power  to  declare 
void  a  lease  made  by  receiver  in  good 
faith,  in  accordance  with  the  pro- 
visions of  a  will,  in  the  interests  of 
the  beneficiaries  of  such  will.  Bay- 
ly V.  Gaines  (Va.)  2  S.  E.  739. 


Page  108,  sec.  37. — Power  over  property  in  foreign  jurisdiction. 


A  receiver  of  rents  in  India  may 

be  appointed  in  England.     v. 

Lindsey,  15  Ves.  Jr.  91. 

Courts  exercise  jurisdiction  in  re- 
lation to  lands  abroad,  where  the  par- 
ties are  within  control.  Massie  v. 
Watts,  6  Cranch,  148,  3  L.  ed.  181; 
Ward  V.  Arredondo,  Hopk.  Ch.  213, 
14  Am.  Dec.  543 ;  Le  Roy  v.  Rogers, 


3  Paige,  236;  Hawley  v.  James,  7 
Paige,  218,  32  Am.  Dec.  623;  Sutphen 
v.  Fowler,  9  Paige,  280;  Briggs  v. 
French,  1  Sumn.  504;  Congden  v. 
Lee,  3  Edw.  Ch.  307. 

In  England  the  court  has  enter- 
tained jurisdiction  to  settle  bound- 
aries in  Jamaica.  Tulloch  v.  Hart- 
ley, 1  Younge  &  C.  Ch.  Cas.  114. 


Page  111,  sec.  38. — Power  to  impeach  fraudulent  acts  of  debtor. 


Fraudulent  mortgages. 

A  receiver  in  supplementary  pro- 
ceedings may  avoid  an  invalid  mort- 
gage in  behalf  of  the  creditors  he 
represents.  Hedges  v.  Polhemus,  9 
Misc.  680;  Mandeville  v.  Avery,  124 
N.  Y.  376  iKuser  v.  Wright,  52  N.  J. 
Eq.  825. 

A  receiver  of  an  insolvent  corpo- 
ration may  assail  a  chattel  mortgage 
executed  by  the  corporation  because 
of  the  failure  to  refile  it  as  required 
by  the  New  York  statute.  Farmers' 
Loan  &  T.  Co.  v.  Baker,  20  Misc.  387. 

The  receiver  of  the  property  of  a 
corporation  may  avoid  a  prior  chat- 


tel mortgage  upon  the  corporate 
property,  on  the  ground  that  it  was 
not  filed  as  required  by  the  law  re- 
lating to  such  mortgages.  Bayne 
v.  Brewer  Pottery  Co.  90  Fed.  Rep. 
754. 

Fraudulent  conveyances. 

The  receiver  of  an  insolvent  debt- 
or may  avoid  a  sale  by  such  debtor  of 
his  personal  property  to  defraud  hi3 
creditors  by  demanding  of  the  fraud- 
ulent vendee  a  return  of  the  prop- 
erty, and  may  replevy  the  property, 
or  sue  the  vendee  for  its  value,  upon 
the  refusal  of  such  dc^nand,  without 
first  bringing  an  equitable  action  to 

37 


V 


§  40 


^RECEIVERSHIPS— SUPPLEMENT 


ipPl 


set  aside  the  sfile.  Rossuian  v. 
Mitchell  (Minn.)  75  N.  W.  1053,  De- 
nying Rehearing  in  7G  N.  W.  48. 

Without  an  action  for  that  pur- 
pose the  i-eceiver  is  in  no  position  to 
question  the  validity  of  a  transfer. 
Re  Castle,  2  N.  Y.  S.  R.  3()2. 

The  receiver  of  an  insolvent  com- 
pany may  by  suit  or  defense  avoid 
any  instrument  which  is  a  fraud  on 
creditors.  Graham  Button  Co.  v. 
Spielmann,  50  N.  J.  Eq.  120. 

A  receiver  appointed  in  an  action 
by  the  creditors  of  a  firm  in  aid  of  an 
assignment  for  creditors  by  the  firm 
to  set  aside  a  prior  transfer  to  a  cor- 
poration cannot  properly  be  treated 
as  a  receiver  of  the  corporation,  al- 
though he  entertains  the  belief  that 
he  is  such  a  receiver,  and  has  so  de- 
scribed himself  in  certain  papers. 
Badger  v.  Sutton,  30  App.  Div.  294. 

Notice  under  New  York  statute  to 
parties  with  property  in  their  posses- 
sion to  turn  over  is  not  a  prerequi- 
site to  a  suit  by  him  to  compel  an  ac- 
counting for  property  transferred. 
Stiefel  V.  A'ezc  York  Novelty  Co.  25 
Misc.  221. 

A  receiver  in  supplementary  pro- 
ceedings of  the  property  of  a  foreign 
corporation  has  the  same  right  as 
any  other  receiver  of  a  corporation, 
under  N.  Y.  Laws  1858,  chap.  314,  §§ 
1,  2.  Stephens  v.  Meriden  Britan- 
nia Co.  13  App.  Div.  2GS. 

A  receiver  in  a  supplemental  pro- 
ceeding has  no  right  to  bring  suit 
to  set  aside  a  conveyance  to  hinder, 
delay,  or  defraud  creditors.  Hayner 
V.  Foiclcr,  16  Barb.  300. 

A  receiver  may  repudiate  the  ille- 
gal transfer  of  securities.  Ohio  v. 
Leavitt,  7  N.  Y.  328. 

Before  a  receiver  can  disaffirm  a 


fiaudulont  conveyance,  ho  must  show 
a  judgment  and  execution  returned, 
as  in  such  case  he  does  not  repre- 
sent the  corporation,  but  the  credit- 
ors. Buckley  v.  Harrison,  10  Misc. 
083. 

A  receiver  is  the  only  one  who  can 
attack  a  fraudulent  conveyance. 
Angcll  V.  Pickard,  01  Mich.  501. 

Fraudulent  judgments. 

A  receiver  of  a  corporation  is  not 
estopped  to  assail  a  confession  of 
judgment  by  the  corporation  on  the 
ground  that  it  was  made  while  the 
corporation  was  insolvent,  by  an  or- 
der of  the  court  approving  the  report 
of  a  former  receiver  of  the  corpora- 
tion, which  falsely  represented  that 
all  of  the  debt,  except  a  balance 
upon  the  judgment,  had  been  paid, 
permitting  him  to  turn  over  the 
goods  in  his  hands  to  the  corporation 
subject  to  the  lien  of  the  judgment, 
and  discharging  him  as  receiver. 
Compton  V.  Schwahacher  Bros.  &  Co. 
15  Wash.  306. 

A  receiver  of  the  goods  of  a  debtor 
is  properly  appointed  under  N.  C. 
Code,  §  379,  subd.  1,  in  proceedings 
to  restrain  the  sale  of  such  property 
by  one  to  whom  the  debtor  has  con- 
fessed judgment  and  who  has  seized 
the  same  under  execution,  where 
there  is  evidence  that  such  judg- 
ment was  confessed  for  the  purpose 
of  defrauding  creditors,  and  the 
debtor  has  no  property  in  the  state 
subject  to  execution,  and  that  the 
sheriff  sold  the  property  under  such 
execution  after  the  issuance  of  the 
restraining  order  to  the  judgment 
creditors,  who  still  have  the  property 
or  its  proceeds.  Stern  v.  Austern, 
120  N.  C.  107. 


Page  117,  sec.  40. — Power  to  issue  certificates. 


Formal  notice  of  an  application 
for  the  issuance  of  receivers'  certifi- 
cates which  shall  be  prior  to  existing 
liens  need  not  be  given  to  the  hold- 
ers of  such  liens,  provided  its  equiva- 


lent is  given  and  they  are  allowed  the 
opportunity  of  contesting  the  appli- 
cation. Crosby  v.  Morristovm  &  C. 
G.  R.  Co.  (Tenn.  Ch.  App.)  42  S.  W. 
507. 


a8 


LKON  F.  MOs 


^ 


It  is  not  an  unbending  rule  that  a 
receiver  is  not  allowed  to  appeal 
from  an  order  to  turn  over  property 
and  funds.  Thus,  if  he  is  ordered  to 
turn  over  more  than  he  has  in  cus- 
tody, it  is  essential  to  the  protection 
of  his  rights  that  he  be  allowed  to 
appeal.     Uoio  v.  Jones,  60  Iowa,  70. 

An  order  that  a  receiver  invest 
funds  is  appealable.  Collins  v. 
Case,  25  Wis.  651. 

A  receiver  appointed  in  a  suit  to 
foreclose  a  mortgage  on  a  railroad 
may  appeal  from  a  judgment  against 
him  for  damages  for  personal  in- 
juries. Thorn  v.  Pittard,  8  U.  S. 
App.  597,  62  Fed.  Kep.  232,  10  C.  C. 
A.  352. 

Where  a  decree  appointing  a  re- 
ceiver decides  the  right  to  possession 
of  property  in  contest,  and  the  com- 
plainant is  entitled  to  have  it  im- 
mediately carried  into  effect,  it  is 
final  and  appealable.  Winthrop 
Iron  Co.  V.  Meeker,  109  U.  S.  180,  27 
L.  ed.  898. 

An  appeal  may  be  taken  from  an 
order  to  a  receiver  appointed  to  set- 
tle partnership  affairs,  to  pay  either 
or  both  members,  upon  request,  for 
services  in  conducting  the  firm  busi- 
ness, without  reference  to  the  state 
of  the  accounts  between  them  as 
shown  by  the  firm  books,  the  pay- 
ments to  be  accounted  for  on  final 
settlement,  where  the  state  of  the  as- 
sets is  such  that  the  payments,  if 
erroneous,  cannot  be  restored.  Tay- 
lor V.  Sweet,  40  Mich.  736. 

An  appeal  may  be  taken  by  re- 
ceivers for  a  corporation,  either  in 
their  own  names  or  that  of  the  cor- 
poration, from  an  order  continuing 
an  action  against  them,  made  in  a 
case  pending  when  the  appointment 
was  made.  People  v.  Troy  Steel  & 
I.  Co.  82  Hun,  303. 

An  appeal  by  a  receiver  from  an 
order  granted  on  an  intervening  pe- 
tition is  proper  when  it  is  in  the  na- 
ture of  an  adversary  proceeding. 
Dillingham  v.  Hawk,  23  U.  S.  App. 
273,  GO  Fed.  Rep.  494,  23  L.  R.  A. 
517. 

A  motion  in  vacation  for  the  revo- 
cation of  an  ex  parte  appointment  of 


a  receiver,  which  was  made  in  vaca- 
tion, is  permitted  by  a  reasonable 
construction  of  Mo.  Laws  1895,  p.  91, 
providing  for  an  appeal  from  an  or- 
der refusing  to  revoke  or  change  an 
interlocutory  order  appointing  a  re- 
ceiver. St.  Louis,  K.  <&  S.  R.  Co.  v. 
Wear,  135  Mo.  230,  sub  nom.  State, 
St.  Louis,  K.  d  S.  B.  Co.,  v.  Wear,  33 
L.  R.  A.  341. 

An  order  appointing  a  receiver  is 
appealable  as  a  final  judgment,  with- 
in the  meaning  of  Utah  Const  art.  8, 
§  9,  as  the  question  whether  an  or- 
der is  appealable  depends  on  its  ef- 
fect on  the  rights  of  the  parties, 
rather  than  the  stage  of  the  litiga- 
tion. Ogden  City  v.  Bear  Lake  & 
River  Watenvorks  <&  Irrig.  Co.  16 
Utah,  440,  41  L.  R.  A.  305. 

A  receiver  may  appeal  in  his  in- 
dividual capacity  from  an  order 
which  determines  that  after  his  dis- 
charge from  office  he  will  be  per- 
sonally liable  for  obligations  which 
he  has  contracted  officially.  Re 
Premier  Cycle  Mfg.  Co.  70  Conn.  473. 

The  creditors  of  an  insolvent  cor- 
poration, part  of  the  assets  of  which 
consist  of  the  stock  in  another  in- 
solvent corporation,  may  appeal 
from  the  allowance  of  claims  against 
the  latter  corporation  by  the  receiver 
thereof,  where  such  receiver  is  also 
receiver  of  the  other  corporation. 
Blake  v.  Domestic  Mfg.  Co.  (N.  J. 
Eq.)  14  Bkg.  L.  J.  550,  38  Atl.  241. 

A  corporation  can  appeal  suspen- 
sively  from  an  order  appointing  a  re- 
ceiver for  it.  Metropolitan  Bank  v. 
Commercial  Soap,  C.  cC-  S.  Manufac- 
tory, 48  La.  Ann.  1383. 

Mandamus  will  not  lie  in  Michi- 
gan to  review  an  order  for  the  ap- 
pointment of  a  receiver.  Scott  v. 
Speed,  58  Mich.  312. 

An  attaching  creditor  whose  right 
to  intervene  has  been  denied  in  a 
proceeding  to  appoint  a  receiver  has 
no  appeal.  He  may  resort  to  pro- 
hibition. State,  J.  M.  Arthur  Mach. 
Co.,  v.  Snohomish  County  Super.  Ct. 
7  Wash.  77. 

Objections  to  the  preliminary 
affidavit  in  supplementary  proceed- 
ings cannot  be  raised  on  an  appeal 

89 


§41 


RECEIVERSHIPS— SUPPLEMENT. 


from  the  order  appointing  the  re- 
ceiver, when  not  made  in  the  trial 
court.  Union  Bank  v.  Sargent,  53 
Barb.  422,  35  How.  Pr.  87. 

An  order  by  the  supreme  court  of 
New  York,  granted  upon  tlie  appli- 
cation of  a  receiver,  extending  the 
time  for  presentation  of  claims,  is 
discretionary,  and  therefore  not  ap- 
pealable. People,  Atty.  Gen.,  v.  Se- 
curity L.  Ins.  &  Annuity  Co.  79  N. 
Y.  21)7. 

No  appeal  lies  under  Miss.  Code, 
§  2311,  from  an  order  removing  a  re- 
ceiver. Hanon  v.  Weil,  09  Miss. 
470. 

An  appeal  will  not  lie,  in  the  ab- 
sence of  statutory  authority,  from 
an  order  substituting  one  person  for 
another  as  receiver.  International 
Bldg.  L.  c6  Invest.  Union  v.  McGoni- 
gle,  72  111.  App.  399. 

An  appeal  from  an  order  substitut- 
ing one  person  for  another  as  re- 
ceiver is  not  authorized  by  111.  act 
1887,  providing  that  whenever  an  in- 
terlocutory order  is  entered  "ap- 
pointing a  receiver,"  an  appeal  may 
be  taken   therefrom.     Ihid. 

A  receiver  cannot  appeal  from  an 
order  removing  him  from  office,  on 
the  ground  that  a  finding  of  facts 
therein  states  that  he  mismanaged 
the  property  in  various  particulars, 
and  that  his  business  reputation  may 
be  thereby  damaged,  where  he  asked 
to  have  such  finding  made,  and  there 
was  no  necessity  for  it.  Re  Premier 
Cycle  Mfg.  Co.  70  Conn.  473. 

A  receiver  cannot,  either  as  such 
or  individually,  appeal  from  an  or- 
der removing  him  from  office,  where 
the  court  had  jurisdiction  to  make 
it.     Ihid. 

A  receiver  cannot  appeal  from  an 
order  removing  him  from  office,  on 
the  ground  that  it  contains  a  finding 
which  may  be  construed  to  import 
that  he  is  personally  liable  for  cer- 
tain bills  contracted  by  him  as  re- 
ceiver, as  such  finding  cannot  be 
used  against  him  on  any  subsequent 
accounting,  or  in  any  other  suit. 
lUd. 

A  receiver  has  no  right  to  appeal 
from  an  order  denying  a  motion 
made  pending  a  hearing  upon  a  pe- 
tition for  his  removal,  authorizing 
him  to  sell  certain  property  of  the 

40 


estate  at  auction,  and  from  the  pro- 
ceeds pay  debts  wliich  he  liad  con- 
tracted in  tlie  management  of  tiie 
business.     Ihid. 

An  appeal  will  not  lie  by  a  rail- 
road company  from  the  portion  of  an 
order  denying  a  petition  for  the  pay- 
ment of  debts  incurred  for  current 
expenses  before  the  receivers'  ap- 
pointment, out  of  the  assets  in  his 
hands,  which  declares  that  the  com- 
pany is  indebted  to  the  petitioners, 
as  such  provision  would  not  bind  the 
company  in  any  proceedings  taken 
for  the  collection  of  the  claim. 
Guarantee  Trust  &  8.  D.  Co.  v. 
Philadelphia,  R.  d  N.  E.  R.  Co.  31 
App.  Div.  511. 

A  receiver  cannot  appeal  from  a 
decree  allowing  certain  just  claims 
preference  to  a  mortgage,  on  the 
ground  that  there  had  been  no  diver- 
sion of  income,  where  neither  the 
trustee  nor  the  bondholders  object. 
Bostcorth  V.  Terminal  R.  Asso.  53 
U.  S.  App.  302,  80  Fed.  Rep.  969,  26 
C.  C.  A.  279. 

The  objection  that  the  receiver  ap- 
pointed to  rent  out  land  until  it 
could  be  sold  in  partition  proceed- 
ings was  a  solicitor  in  the  case  and 
interested  in  the  land  as  an  heir  is 
not  available  on  appeal  in  the  parti- 
tion proceedings  after  the  receiver 
has  made  final  settlement, — especial- 
ly where  no  specific  wrong  by  him  is 
pointed  out.  Rogers  v.  Rogers 
(Tenn.  Ch.  App.)    42  S.  W.  70. 

The  creditors  of  an  insolvent  cor- 
poration, part  of  the  assets  of  which 
consist  of  the  stock  in  another  in- 
solvent corporation,  may  appeal 
from  the  allowance  of  claims  against 
the  latter  corporation  by  the  receiver 
thereof,  where  such  receiver  is  also 
receiver  of  the  other  corporation. 
Blake  v.  Domestic  Mfg.  Co.  (N.  J. 
Eq.)    14  Bkg.  L.  J.  550,  38  Atl.  241. 

Time  withi^i  which  appeal  taken. 

An  appeal  must  be  taken  within 
the  time  allowed  by  statute.  Rus- 
sell V.  First  Nat.  Bank,  65  Iowa, 
242. 

A  delay  of  eight  years  in  appealing 
from  a  receiver's  disallowance  of  a 
claim  is  a  bar  to  relief.  Leo  v. 
GVeoi,  52  N.  J.  Eq.  1.- 


EECEIVER'S  POWERS. 
Page  119,  sec.  42. — Miscellaneous  powers. 


§  42 


A  receiver  under  the  direction  and 
authority  of  the  court  has  power  to 
continue  the  payment  of  bounties. 
Re  Reddington,  1  Molloy,  256. 

To  sell  horses  as  perishable  prop- 
erty. Howell  V.  Frances  (N.  J.  Eq.) 
9  Atl.  379. 

To  proceed  and  act  for  all  credit- 
ors. Angell  v.  Silsbury,  19  How.  Pr. 
48. 

To  complete  an  unfinished  portion 
of  a  railroad.  Kennedy  v.  St.  Paul 
d  P.  R.  Co.  2  Dill.  448. 

And  may  apply  to  court  for  in- 
structions. Re  Knickerbocker  Bank, 
19  Barb.  G02. 

The  court  in  possession  through  its 
receiver  exercises  the  power  of  the 
board  of  directors  of  an  insolvent  in- 
surance company  in  addition  to  the 
powers  conferred  by  statute.  Rand, 
McN.  &  Co.  V.  Mutual  F.  Ins.  Co.  58 
111.  App.  528. 

The  receiver  has  no  power  to  trans- 
fer to  a  foreign  jurisdiction  ques- 
tions concerning  the  distribution  of 
assets.  Reynolds  v.  Stockton,  43  N". 
J.  Eq.  211. 

Or  to  condemn  property  for  rail- 
road purposes.  Minneapolis  &  St. 
L.  R.  Go.  V.  Minneapolis  &  W.  R.  Co. 
61  Minn.  502. 

The  receiver  of  a  nonresident  as- 
sociation is  not,  as  matter  of  right, 
entitled  to  appear  and  defend  in  at- 
tachment proceedings  against  it, 
•where  its  nonresident  assignee  has 
appeared  and  moved  to  have  the  pe- 
tition made  more  definite,  and  has 
thereafter  made  default,  although 
the  receiver's  answer  was  filed  be- 
fore the  default  was  entered  against 
the  association  and  its  assignee. 
Eedrick  v.  McElroy  (Iowa)  76  N. 
W.  710. 

A  sheriflf  appointed  receiver  of  the 
property  of  a  judgment  debtor  as 
permittea  bj'  the  Kansas  statute  has 
the  same  authority  as  any  other  ap- 
pointee would  have.  Teats  v.  Bank 
of  Herington,  58  Kan.  721. 

A  receiver  is  entitled,  the  same  as 
any  other  party  in  an  action  to 
which  he  is  a  party,  to  a  trial  by 
jury  on  questions  of  fact,  the  right 
to  which  is  guaranteed  by  the  Texas 


Constitution.  Eamm  v.  /.  Stone  & 
Sons  Live-stock  Co.  13  Tex.  Civ. 
App.  414. 

A  receiver  of  a  national  bank  can- 
not recover  upon  notes  made  for  the 
accommodation  and  advantage  of  the 
bank  with  full  notice  to  its  manag- 
ing officer,  as  he  stands  in  the  shoes 
of  the  bank.  Stapylton  v.  Teague, 
52  U.  S.  App.  577,  85  Fed.  Rep.  407, 
29  C.  C.  A.  229. 

In  an  action  upon  a  promissory 
note,  brought  by  one  who  purchased 
it  in  good  faith  at  a  judicial  sale 
made  under  the  authority  and  with 
the  sanction  of  the  court,  an  inter- 
vening receiver  w'ho  sets  up  title  to 
the  note  cannot  be  permitted  to  col- 
laterally impeach  such  sale,  where 
the  parties  at  whose  suit  he  was  ap- 
pointed had  opportunity  to  seize  the 
assets  before  the  sale  or  intervene 
in  the  actions  which  led  up  to  it. 
Anderson  v.  Chicago  Title  &  T.  Co. 
101  Wis.  385. 

The  power  of  a  receiver  to  incur 
obligations  for  supplies  and  ma- 
terials incidental  to  the  business, 
with  permission  of  the  court,  follows 
as  a  necessary  incident  to  the  re- 
ceivership. Cake  V.  Mohun,  164  U.  S. 
311,  41  L.  ed.  447;  Ellis  v.  Veryion 
Ice,  Light  &  W.  Co.  86  Tex.  109. 

A  receiver  of  a  corporation,  with 
only  the  power  specified  in  N.  Y. 
Code  Civ.  Proc.  §  1788,  is  a  mere  cus- 
todian and  manager  of  the  property 
under  direction  of  the  court  during 
the  pendency  of  the  action,  and  can- 
not discharge  an  employee  under  con- 
tract with  the  corporation,  or  au- 
thorize a  deputy  to  do  so.  Murray 
V.  Cantor,  18  Misc.  389. 

A  receiver  and  manager  of  a  com- 
pany cannot  annul  its  contracts. 
Re  Marriage  [1890]  2  Ch.  063,  65 
L.  J.  Ch.  N.  S.  839,  75  L.  T.  N.  S. 
169. 

A  receiver  in  chancery  who  wrong- 
fully enters  into  a  partnership  with 
anotiier  cannot  set  up  his  want  of  au- 
thority to  enter  into  such  partner- 
ship as  a  ground  for  maintaining  an 
action  at  law  against  his  partner  for 
a  sum  alleged  to  be  due  by  account, 
where  such  partner  would  otherwise 

41 


42 


RECEIVERSHIPS— SUPPLEMENT. 


be  entitled  to  a  partnership  account- 
ing. IJtoicah  Min.  Co.  v.  Christo- 
pher, 112  Ala.  554. 

A  receiver  has  no  power  to  waive 
the  equitable  rights  of  contractors. 
Keilcy  v.  Dusenhury,  10  Jones  &  S. 
238. 

Or  to  allow  an  offset  purchased 
for  that  purpose  after  his  appoint- 
ment. Van  Dyke  v.  McQuade,  85 
N.  Y.  GIG. 

A  receiver  in  a  suit  in  affirmance 
of  an  assignment  is  not  permitted  to 
come  in  and  open  up  a  decree  in  an- 
other suit,  where  the  assignment  is 
set  aside  as  fraudulent  and  void. 
'Wheeler  v.  Wheedon,  9  How.  Pr.  293. 

A  receiver  cannot  reach  a  surplus 
income  created  by  a  person  other 
than  the  debtor.  Such  power  is  in 
the  creditor  only  in  a  direct  proceed- 
ins.  Levey  v.  Bull,  47  Hun,  350; 
Tolles  V.  ^^^ood,  99  N.  Y.  616;  Mann- 
ing V.  Evans,  19  Hun,  500. 

A  receiver  may  remove  a  cause 
from  a  state  court  to  a  Federal  court 
when  he  is  a  Federal  court  receiver. 
Evans  v.  Dillingham,  43  Fed.  Rep. 
177. 

His  power  ceases  in  an  appeal  in 
an  ejectment  suit,  when  the  rights  of 
parties  are  finally  declared,  after 
which  he  holds  for  the  successful 
partv.  Garniss  v.  San  Francisco 
Super.  Ct.  88  Cal.  413. 

The  acts  of  a  receiver  cannot  be 
questioned  in  a  collateral  proceed- 
ing. Bradley  v.  Marine  River  Phos- 
phate Min.  d  Mfg.  Co.  3  Hughes, 
26. 

Receivers  of  a  national  banlcing 
association,  as  such,  have  not  the 
privilege  in  all  cases  of  being  sued 
in  the  United  States  courts,  and  can- 
not remove  such  cases  against  them 
from  state  to  United  States  courts. 
Bird  V.  Cockrem,  2  Woods,  32. 

The  power  of  a  receiver  is  meas- 
ured by  the  order  of  appointment. 
Grant  v.  Davenport,  18  Iowa,  194. 

But  may  be  enlarged  from  time  to 
time.  State  v.  Edgefield  d  K.  R.  Co. 
6  Lea,  353. 

And  in  all  cases  he  is  bound  by  his 
instructions  and  orders.  Burroughs 
V.  Bunnell,  70  Md.  18. 

The  receiver    is    a    ministerial  of- 
ficer.    Lafayette  Bank   v.   Bucking- 
ham, 12  Ohio  St.  419. 
42 


And  as  such  is  not  required  to  ren- 
der professional  services  as  a  lawyer. 
Olson  v.  State  Bank,  72  Minn.  320. 

The  receiver  in  the  management  of 
receivership  duties  has  discretionary 
power.  Morlcy  v.  Snow  (Mich.)  41 
L.  R.  A.  817,  5  Det.  L.  N.  200. 

A  trustee  in  a  mortgage  executed 
to  a  building  and  loan  association  for 
which  a  receiver  has  been  appointed 
may  sell  the  land  under  a  power 
contained  in  the  mortgage,  but  must 
pay  over  all  the  proceeds  of  the  sale 
to  the  receiver,  although  it  exceeds 
the  amount  of  the  mortgage,  as  the 
liability  of  the  borrowing  member 
cannot  be  known  until  it  is  ascer- 
tained to  what  amount  the  associa- 
tion is  insolvent.  Thompson  v. 
"North  Carolina  Bldg.  &  L.  Asso.  120 
N.  C.  420. 

If  a  receiver  to  collect  has  no  au- 
thority to  pay  debts,  but  does  so  with 
the  knowledge  of  the  parties,  and  no 
objection  is  made  at  the  time,  they 
cannot  afterwards  object.  Kellar 
V.  Williams,  3  Rob.   (La.)   321. 

A  receiver  may  ratify  a  sale  made 
after  insolvency  or  suspension  of 
business,  though  the  act  is  void  un- 
der statute.  Suydam  v.  Bank  of 
Kew  Brunswick,  3  N.  J.  Eq.  114. 

The  power  conferred  upon  the  di- 
rectors of  an  insurance  company  by 
a  premium  note  by  which  the  maker 
promised  to  pay  the  company  a  cer- 
tain sum  of  money,  "in  such  pro- 
portions and  at  such  time  or  times 
as  the  directors  of  said  company 
may,  agreeable  to  their  charter,  re- 
quire,"' passes  to  a  receiver  of  the 
company  appointed  by  the  court  of 
chancery  in  proceedings  taken  pursu- 
ant to  the  New  Jersey  statute, 
against  the  company  as  an  insolvent 
corporation.  Meley  v.  Whitaker,  61 
N.  J.  L.  602,  Affirming  38  Atl.  840. 

The  power  of  the  court  to  appoint 
a  receiver  to  collect  the  assets  of  a 
mutual  benefit  association  does  not 
change  the  character  of  the  contract 
between  the  association  and  its  mem- 
bers, so  as  to  make  them  debtors  for 
assessments,  when  by  the  contract 
they  were  not  so.  Lehman  v.  Clark, 
174  111.  279,  43  L.  R.  A.  648,  Revers- 
ing 71  111.  App.  366. 

A  receiver  to  collect  rents  has 
power    until    he  is   discharged,    al- 


RECEIVER'S  POWERS. 


§  43 


though  the  suit  has  abated.  'New- 
man V.  Mills,  1  Hogan,  291. 

A  mortgagee  does  not  exhaust  his 
remedy  by  a  foreclosure  and  sale, 
but  a  receiver  may  be  thereafter  ap- 
pointed to  collect  the  rents  and  prof- 
its during  the  period  of  redemption 
and  apply  them  upon  an  ascertained 
deficiency,  wiien  the  mortgagor  is  in- 
solvent. First  Nat.  Bank  v.  Illinois 
Steel  Co.  174  III.  140,  Affirming  72 
111.  App.  640. 

A  receiver  appointed  under  Minn. 
Gen.  Stat.  1894,  chap.  76,  in  an  ac- 
tion for  the  sequestration  of  tlie  as- 
sets of  an  insolvent  corporation,  has 
no  authority,  except  in  cases  where 
it  is  otherwise  pro\aded  by  statute, 
to  enforce  the  individual  liability  of 
the  stockholders  of  the  corporation 
for  its  debts.  Minneapolis  Baseball 
Co.  V.  City  Bank,  66  Minn.  441,  38 
L.  R.  A.  415. 

The  right  of  receivers  of  insolvent 
banking  corporations  appointed  un- 
der Minn.  Laws  189.5,  chap.  145,  § 
20,  to  enforce  the  stockholders'  lia- 
bility, is  primarily  exclusive  of  the 
right,  under  Minn.  Gen.  Stat.  1894, 
chap.  76,  to  enforce  such  liability; 
but  the  creditors  may  for  good  cause 
shown  be  permitted  by  the  court  in 
■which  the  insolvency  proceedings  are 
pending  to  enforce  such  liability 
when  the  receivers  neglect  to  do  so. 
Anderson  v.  Seymour,  70  Minn.  358. 

A  receiver  to  whom  a  court  of  com- 
petent jurisdiction  orders  the  pay- 
ment of  assessments  by  stockholders 
has  no  authority  to  consent  to  a  de- 
cree in  another  state  for  the  payment 
of  such  obligations  to  the  creditor 
in     whose    suit    he    was    appointed. 


Castleman  v.  Tenipleman,  87  Md. 
546,  41  L.  R.  A.  367. 

The  receiver  of  a  corporation,  in 
the  absence  of  statutory  authority, 
cannot  sue  to  enforce  a  liability  cre- 
ated by  statute  against  stockholders 
in  favor  of  creditors,  independently 
of  what  they  owe  the  corporation  on 
the  amount  of  their  stock.  Gainey 
V.  Gilson,  149  Ind.  58. 

The  court  has  power  to  order  a 
state  treasurer  to  pay  over  to  a  re- 
ceiver money  held  in  his  hands  as  a 
bank  fund.  Danhy  Bank  v.  State 
Treasurer,  39  Vt.  92. 

The  receiver  of  an  insolvent  cor- 
poration has  no  right  to  file  a  motion, 
in  assignment  proceedings  by  it,  for 
the  dismissal  of  such  proceedings  on 
the  ground  that  the  assignment  for 
creditors  was  made  while  the  pro- 
ceedings for  the  appointment  of  the 
receiver  were  pending.  Flint  v. 
Poicell,  10  Colo.  App.  66. 

A  receiver  cannot  assign  an  inter- 
est in  a  patent  right.  Gordon  v. 
Anthony,  16  Blatchf.  234. 

And  he  has  no  right  to  a  partition 
of  property,  but  may  have  dower  as- 
signed. Tayne  v.  Becker,  87  N.  Y.  153. 

Liquidating  commissioners  of  a 
defunct  corporation  cannot  as  such 
contest  debts  of  copartnerships  from 
the  consolidation  of  which  the  cor- 
poration was  formed,  and  whose  as- 
sets it  took  possession  of,  and  whose 
indebtedness  it  assumed  to  pay,  on 
the  ground  that  more  than  the  legal 
rate  of  interest  was  included  in  set- 
tlement of  the  account  by  such  firm, 
although  dividends  to  other  credit- 
ors are  reduced.  Re  Leeds  &  Co.  49 
La.  Ann.  501. 


Page  121. — Receiver's  possession. 


The  possession  of  the  receiver  un- 
der the  direction  of  the  court  is  the 
possession  of  the  party  entitled  to 
the  rents  and  profits.  Horlock  v. 
Smith,  11  L.  J.  Ch.  N.  S.  157,  6  Jur. 
478. 

And  after  his  discharge  his  posses- 
sion is  that  of  the  party  in  interest. 
Ibid. 

In  supplementary  proceedings  the 
judge  has  control,  under  the  Nevr 
York  Code,  over    the    assets    in    the 


hands  of  a  receiver.  Webber  v.  Bob- 
bie, 13  How.  Pr.  382. 

A  receiver  cannot  devest  himself 
of  trust  powers.  Mann  v,  Fairchild, 
2  Keyes,   106. 

He  must  not  interfere  in  litigation 
between  parties.  Comyn  v.  Smith,  1 
Hogan,  81. 

The  claim  of  an  equity  or  lien  on 
property  held  by  an  officer  of  a  cor- 
poration to  secure  a  debt  to  himself 
does  not  defeat  the  jurisdiction  of  a 

43 


§  43 


RECEIVERSHIPS— SUPPLEAIENT. 


court  which  has  appointed  a  receiver 
for  the  corporation  in  a  suit  to  which 
the  oflleer  is  a  party,  after  hearing 
on  due  notice  and  appearance,  to  or- 


der him  to  turn  over  such  property 
to  the  receiver.  Tinslcy  v.  Ander- 
son, 171  U.  S.  101,  43  L.  ed.  91. 


Page  121,  sec.  43. — How  disturbed. 


After  a  receiver  has  been  ap- 
pointed and  has  become  vested  with 
the  title  to  all  assets,  the  creditor  in 
whose  behalf  he  has  been  appointed 
has  no  right  to  intervene  and  seize 
upon  part  of  the  estate.  Passavant 
v.  Bowdoin,  60  Hun,  433;  American 
Trust  &  Sav.  Bank  v.  Frankcnthal, 
55  111.  App.  400:  Parker  v.  Brown- 
ing, 8  Paige,  388;   Wardle  v.  Lloyd, 

2  Molloy,  388 ;  State,  Remington 
Paper  Co.,  v.  Ellis,  45  La.  Ann.  1418 ; 
Tinlc  V.  Rundle,  10  Beav.  318;  Ames 
v.  Birkenhead  Docks,  20  Beav.  332, 
1  Jur.  N.  S.  529;  Klauber  v.  San 
Diego  Street  Car  Co.  95  Cal.  353; 
Dor  man  v.  Dor  man,  3  Ir.  Eq.  Rep. 
385. 

Unless  the  title  of  a  receiver  of  a 
state  court  is  impeached  under  the 
bankrupt  act,  his  possession  of  the 
assets  will  not  be  interfered  with  by 
the  Federal  court  in  bankruptcy 
proceedings.  Re  Price  (1899)  92 
Fed.  Rep.  987 ;  Alden  v.  Boston,  H. 
&  E.  R.  Co.  (1871)  5  Nat.  Bankr. 
Reg.  230;  Clark  v.  Bininger  (1870) 

3  Nat.  Bankr.  Reg.  518. 

Funds  vested  in  a  receiver  four 
months  prior  to  the  bankrupt  pro- 
ceedings will  not  be  interfered  with 
by  the  bankrupt  court.  Re  Meyer 
(1899)    1  Nat.  Bankr.  News,  293. 

A  receiver  in  possession  of  mort- 
gaged premises  in  foreclosure  pro- 
ceedings prior  to  the  commencement 
of  bankruptcy  proceedings  cannot 
be  dispossessed  by  the  bankrupt 
court.  Davis  v.  Alabama  &  F.  R.  Co. 
1  Woods,  661. 

After  property  is  taken  into  the 
possession  of  a  court,  no  other  court 
can  interfere  with  the  possession. 
Hammond  v.  Tarver  (Tex.  Civ.  App.) 
31  S.  W.  841. 

A  receiver  in  supplementary  pro- 
ceedings becomes  the  legal  assignee 
of  the  property  in  the  order  men- 
tioned, and  the  debtor  cannot  inter- 
fere with  it.  Turner  v.  Holden,  94 
N.  C.  70. 
44 


Where  a  receiver  is  in  possession, 
other  persons  are  not  permitted  to 
enter  without  permission,  under  a 
claim  not  theretofore  exercised. 
Johnes  v.  Claughton,  Jac.  573. 

A  sale  of  land  by  the  trustee  in  a 
deed  of  trust,  under  a  power  con- 
tained therein,  while  all  the  property 
of  the  mortgagor  is  in  the  hands  of 
a  receiver,  is  void.  Scott  v.  Craw- 
ford, 16  Tex.  Civ.  App.  477. 

The  sale  of  property  under  execu- 
tion while  in  the  hands  of  a  receiver 
is  void,  though  the  levy  is  made  be- 
fore the  appointment.  Walling  v. 
Miller,  108  N.  Y.  173. 

When  a  receiver  is  in  possession  of 
property,  in  a  suit  involving  the 
right  of  possession  merely,  the  sale 
of  such  property  by  another  court  is 
not  an  interference  with  the  posses- 
sion. Uickox  v.  Holladay,  2'J  Fed. 
Rep.  226. 

A  judgment  creditor  will  not,  in 
general,  be  allowed  to  enforce  his 
judgment  by  sale  of  property  in  the 
hands  of  a  receiver.  Mercantile 
Trust  Co.  V.  Baltimore  &  0.  R.  Co. 
79  Fed.  Rep.  389. 

Property  in  the  hands  of  a  re- 
ceiver cannot  be  attached.  Adams 
V.  Roman  (unreported),  cited  in 
Adams  v.  Hackett,  7  Cal.  204. 

Execution  cannot  issue  on  a  judg- 
ment against  a  receiver.  Arnold  v. 
Penn,  11  Tex.  Civ.  App.  325. 

But  a  receiver  has  no  right  to  the 
possession  of  property  actually  at- 
tached and  in  the  possession  of  at- 
taching creditors.  State,  Perkins, 
V.  Graham,  9  Wash.  528. 

A  receivers'  possession  is  not  to  be 
interfered  with  by  suits  or  other 
legal  proceedings  without  leave.  De 
Graffenried  v.  Brunswick  &  A.  R.  Co. 
57  Ga.  22. 

An  action  may  be  maintained  by 
the  direction  of  the  governor  for  the 
sole  purpose  of  determining  the  ques- 
tion of  title  to  certain  lands  in  con- 
troversy between  the  state  and  a  des- 


RECEIVER'S  POSSESSION. 


S  43 


ignated  railway  company,  although 
such  company  and.  the  lands  in  con- 
troversy are  in  the  custody  of  a  re- 
ceiver appointed  by  the  Federal 
court,  and  such  court  has  not  given 
permission  to  sue.  Houston  <&  T.  C. 
R.  Co.  V.  State  (Tex.  Civ.  App.)  39 
S.  W.  390. 

The  possession  of  property  by  a 
receiver  in  a  state  court  is  no  bar  to 
a  bill  by  a  creditor  in  a  Federal 
court.  Rejall  Greenwood,  60  Fed. 
Rep.  784. 

The  court  cannot  permit  an  at- 
tachment to  be  levied  upon  personal 
property  capable  of  manual  delivery, 
of  a  corporation,  after  the  appoint- 
ment of  a  receiver,  because  of  a  false 
denial  by  certain  persons  to  the 
sheriff  that  they  had  such  property 
of  the  corporation  in  their  posses- 
sion, as  such  denial  and  the  conse- 
quent failure  of  the  sheriff  to  take 
the  property  into  his  actual  custody 
do  not  constitute  a  substitute  for  the 
actual  custody,  which,  under  N.  Y. 
Code  Civ.  Proc.  §  649,  is  essential  to 
a  lew  on  such  property.  Robinson 
V.  Columbia  Spinning  Co.  23  App. 
Div.  499. 

That  a  firm  made  a  number  of 
fraudulent  transfers  of  property  a 
short  time  before  the  commencement 
of  an  action  for  the  dissolution  of  the 
partnership  and  the  appointment  of 
a  receiver  does  not  necessarily  es- 
tablish that  the  appointment  of  a 
temporary  receiver  in  the  action  un- 
der an  agreement  of  the  parties  was 
collusive  and  obtained  for  the  pur- 
pose of  hindering,  delaying,  and  de- 
frauding creditors,  so  as  to  take  the 
assets  of  the  firm  out  of  the  control 
of  the  court  and  subject  them  to 
levy  by  creditors.  Myers  v.  Myers, 
18  Misc.  063. 

The  arrest  of  a  receiver  in  attend- 
ance on  court  will  not  be  permitted. 
Bratazon  v.  Teynham,  2  It.  Ch.  Rep. 
563. 

The  court  will  by  injunction  re- 
strain the  enforcement  of  a  judgment 
against  property  in  possession  of  a 
receiver.  Gardner  v.  Caldwell,  16 
Mont.  221. 

How  acquired  or  enforced. 

A  writ  of  assistance  will  be  issued 
to   put  a  receiver   in   posBesaion  of 


leased  premises  after  the  lessee's 
rights  have  terminated,  where  it  be- 
comes necessary  to  enable  him  to 
turn  the  premises  over  to  the  person 
entitled  thereto;  but  the  application 
for  such  writ  must  be  made  by 
some  party  to  the  cause  other  than 
the  receiver.  Stephenson  v.  Giltenau, 
5  Ohio  N.  P.  419. 

When  the  petition  for  the  appoint- 
ment alleged  that  the  property  of  a 
corporation  had  been  transferred  to 
an  alleged  new  company  not  made  a 
party,  the  court  has  no  right  to  grant 
a  writ  putting  the  receiver  in  posses- 
sion. St.  Louis,  K.  d  S.  R.  Co.  v. 
Wear,  135  Mo.  230,  sub  nom.  State, 
St.  Louis  K.  &  S.  R.  Co.,  v.  Wear,  33 
L.  R.  A.  341. 

A  rule  may  be  entered  to  show 
cause  why  real  estate  should  not  be 
surrendered  to  a  receiver,  and  en- 
force rights  of  the  receiver  against  a 
party  accused  of  interfering  with  his 
possession  or  management,  xinless 
the  answer  sets  up  some  right  or  title 
of  which  a  jury  trial  is  claimed. 
Sullivan  v.  Colby,  34  U.  S.  App.  432, 
71  Fed.  Rep.  400,  18  C.  C.  A.  193. 

The  court  cannot  through  a  re- 
ceivership interfere  with  a  United 
States  marshal  in  possession  under 
admiralty  process.  Thompson  v. 
Van  Vechten,  5  Duer,  618. 

A  court  will  compel  the  treasurer 
of  a  corporation  to  turn  over  the 
funds  of  the  company,  or  punish  by 
fine  or  imprisonment.  Edrington  v. 
Pridham,  65  Tex.  612. 

An  assignee  who  has  not  obtained 
possession,  but  has  left  the  assignor 
in  possession,  will  be  required  to  de- 
liver it  to  a  receiver.  Eastern  Nat. 
Bank  v.  Hulshizer,  2  N.  Y.  S.  R.  115. 

A  court  of  equitj'^  in  another  state, 
on  a  bill  filed  by  a  receiver  of  a  benev- 
olent society,  can  order  the  trustees 
of  the  local  branch  of  the  association 
to  pay  over  the  funds  in  its  hands  to 
the  receiver.  Failey  v.  Talbee,  55 
Fed.  Rep.  892. 

When  the  custodian  for  a  pur- 
chaser of  property  at  a  sheriff's  sale 
is  not  before  the  court  the  debtor, 
who  is  in  possession,  will  not  be  di- 
rected to  deliver  the  property  to  a  re- 
ceiver. Robeson  v.  Ford,  3  Edw.  Ch. 
441. 

A  receiver    of   a    corporation    ap- 

45 


§  43 


RECEIVERSHIPS— SUPPLEMENT. 


pointed  after  an  assignment  for 
creditors  by  such  corporation,  in  a 
proceeding  for  its  dissolution  com- 
menced before  such  assignment,  can- 
not by  motion  compel  the  assignee  to 
deliver  possession  of  corporate  prop- 
erty. Re  Muehlfcld,  Hi  App.  Div. 
401. 

A  receiver  cannot  be  put  in  posses- 
sion of  property  on  the  application 
of  a  party  who  is  not  himself  en- 
titled to  possession  and  has  no  inter- 
est in  the  property.  Huerstel  v. 
Lorillard,  6  Robt.  260,  7  How.  Pr. 
251. 

The  court  may  compel  delivery  of 
assets  to  the  receiver,  though  the 
party  in  possession  is  under  indict- 
ment for  stealing  the  same.  Tolle- 
son  V.  G-reene,  83  Ga.  499. 

Property  of  a  debtor  who  has 
fraudulently  confessed  judgment  in 
favor  of  one  who  purchased  such 
property  at  a  sale  under  execution 
issued  thereon  still  belongs  to  such 
debtor,  and  should  be  delivered  to  a 
receiver  appointed  in  proceedings  to 
restrain  the  execution  sale.  Stern 
V.  Austeni,  120  N.  C.  107. 

Heirs  to  whom  the  legal  title  to 
real  estate  forming  part  of  a  trust 
and  situated  in  another  state  has 
passed  will  be  directed  to  convey  to 
a  receiver  appointed  of  the  personal 
property  of  the  trust  within  the 
jurisdiction,  where  the  question  as  to 
whether  or  not  the  trust  has  termi- 
nated has  been  reserved  for  final  hear- 
ing, and  all  parties  interested  are 
parties  to  the  suit,  and  it  is  neces- 
sary that  such  real  estate  be  con- 
served pending  the  litigation,  wheth- 
er or  not  such  conveyance  will  give 
the  receiver  authority  which  will  be 
recognized  in  such  other  state,  where, 
owing  to  the  fact  that  there  is  no 
litigation  in  such  other  state,  the 
courts  of  that  state  have  no  power 
in  the  premises.  Hogg  v.  Hoag,  80 
Fed.  Rep.  595. 

Wlien  an  order  is  to  deliver  prop- 
erty the  demand  must  be  made  by 
the  receiver  personally.  McCotnb  v. 
Weaver,  11  Hun,  271. 

When  a  receiver  demands  prop- 
erty, if  the  demand  is  otherwise 
good,  objection  cannot  be  taken  at 
the  trial  that  he  did  not,  when  de- 
mand was  made,  exhibit  evidence  of 
46 


his  appointment,  if  refusal  to  de- 
liver was  not  made  on  that  ground. 
Livingston  v.  Stoesscl,  3  Bosw.  19. 

Mortgagees  entitled  to  possession 
will  be  excused  from  turning  it  over 
to  a  receiver  when  they  are  willing 
to  give  security  for  the  excess. 
Weihl  V.  Atlanta  Furniture  Mfg.  Co, 
89  Ga.  297. 

The  general  practice  of  the  deliv- 
ery of  property  to  a  receiver  under 
the  old  chancery  practice  and  under 
the  Code, — discussed.  Dickerson  v. 
Van  Tine,  1  Sandf.  724. 

A  receiver  of  an  insolvent  cor- 
poration is  entitled  to  the  possession 
of  money  paid  into  court  under  an 
execution  on  a  judgment  against  the 
corporation  rendered  in  favor  of  a 
director  for  the  purpose  of  giving 
him  an  illegal  preference.  Tennant 
V.  Appleby  (N.  J.  Eq.)   41  Atl.  110. 

A  person  claiming  against  a  re- 
ceiver should  be  examined  pro  in- 
ieresse  suo.  Davis  v.  Greathed,  1 
Jac.  &  W.  176. 

One  in  possession  of  lumber  be- 
longing to  a  corporation,  claiming  a 
lien  thereon  under  N.  C.  Code,  § 
1783,  for  manufacturing  the  same, 
should  not  be  required  to  turn  the 
same  over  to  a  receiver  of  the  cor- 
poration, before  a  determination  of 
the  question  as  to  his  right  to  a  lien. 
Eunisman  v.  Linville  River  Lumbar 
Co.  122  N.  C.  583. 

Contempt. 

It  is  contempt  of  court  to  disturb 
the  possession  of  a  receiver.  Ken- 
nedy V.  Indianapolis,  C.  d  L.  R.  Co. 
2  Flipp.  704. 

To  punish  a  person  for  contempt 
in  interfering  with  the  receiver's  pos- 
session, the  proof  must  be  clear  and 
beyond  reasonable  doubt.  United 
States  V.  Jose,  63  Fed.  Rep.  951. 

It  is  a  contempt  of  court  to  cause 
a  receiver's  arrest  for  violating  a 
town  ordinance,  though  the  ordi- 
nance is  void.  United  States  v.  Mur- 
phy, 44  Fed.  Rep.  39. 

When  the  court  is  without  juris- 
diction the  refusal  to  obey  does  not 
render  the  person  liable  for  con- 
tempt. St.  Louis,  E.  d  S.  R.  Co.  v. 
Wear,  135  Mo.  230,  sub  nom.  State, 
St.  Louis,  K.  d  S.  R.  Co.,  v.  Wear,  33 
L.  R.  A.  341. 


EECEIVER'S  POSSESSION. 


§  43 


A  debtor  cannot  be  punished  for 
failure  to  turn  over  property  to  a 
receiver  when  neither  the  order 
appointing  nor  any  subsequent  or- 
der directs  him  to  turn  it  over. 
Watson  V.  Fitzsimmons,  5  Duer,  629. 

Where  the  estate  over  which  a  re- 
ceiver is  appointed  expires,  the  re- 
mainderman may  enter  without  con- 
tempt. Britton  v.  M'Donnell,  5  Ir. 
Eq.  Rep.  275. 

A  receiver  of  a  railroad  who  ousts 
one  immediately  after  possession  of 
a  portion  of  the  railroad's  right  of 
way  has  been  restored  to  him  under 
a  writ  of  possession  is  not  guilty  of 
a  contempt  of  the  orders  or  process 
of  the  court,  where  he  was  not  a 
party  to  the  action,  and  not  in  priv- 
ity with  the  defendant.  Atioood  v. 
State,  59  Kan.  728. 

A  receiver  cannot  be  punished  as 
for  contempt  for  not  obeying  an  or- 
der made  in  another  court.  Merritt 
V.  Sparling,  88  Hun,  491. 

A  receiver  may  be  punished  for 
contempt.  The  proceeding  is  crimi- 
nal in  its  nature.  Thus  the  question 
of  contempt  does  not  depend  on  in- 
tention. Cartwright's  Case,  114 
Mass.  230. 

A  judgment  debtor  who  interferes 
with  the  possession  and  control  of 
his  business  by  a  receiver  after  such 
possession  was  yielded  by  him  is 
guilty  of  contempt.  Sainherg  v. 
Weinberg,  25  Misc.  327. 

A  judgment  debtor  for  whom  a  re- 
ceiver has  been  appointed  may  be  ad- 
judged guilty  of  contempt  in  dis- 
obeying an  order  to  attend  a  hearing 
before  the  circuit  court  commission- 
er for  examination,  although  a  peti- 
tion taken  by  him  to  stay  the  receiv- 
ership proceedings  is  pending,  whei'e 
no  temporary  stay  preventing  the 
judgment  creditor  from  proceeding 
has  been  made.  Central  Nat.  Bank 
V.  Graham  (Mich.)  5  Det.  L.  N.  591, 
76  N.  W.  1042. 

One  who  claims  to  be  the  owner  of 
a  chattel  mortgage  upon  a  lease  of 
premises  and  the  property  thereon 
used  in  the  conduct  of  a  business  is 
guilty  of  contempt  of  court,  and  may 
properly  be  ordered  to  deliver  up  the 
property,  where  in  an  action  to  dis- 
solve the  partnership  a  receiver  had 
been    appointed    whose    representa- 


tive the  chattel  mortgagee  turned 
out  of  possession,  locking  the  door 
upon  him.  Levy  v.  Stanion,  53  N. 
Y.  Supp.  472. 

The  right  to  institute  proceedings 
to  punish  a  former  receiver  as  for 
contempt  in  failing  to  pay  over  the 
amount  due  on  his  accounting  to  his 
successor  passes  to  a  surety  on  his 
bond  who  pays  such  amount  and  re- 
ceives in  pursuance  of  an  order  of 
the  court  an  assignment  of  all  the 
rights  and  remedies  of  the  successor. 
People,  Latoyer's  Surety  Co.,  v.  An- 
thony,  7  App.  Div.  132. 

The  proper  practice  is  for  the  re- 
ceiver to  institute  proceedings  to  set 
aside  transfers,  and  not  by  contempt 
for  failure  to  turn  over.  Ex  parte 
Hollis,  59  Cal.  405. 

A  receiver  of  a  bank  whose  ap- 
pointment was  invalid  because  of  the 
prior  appointment  of  another  re- 
ceiver on  the  same  date  in  another 
proceeding  is  not  punishable  as  for 
contempt  in  taking  and  retaining 
possession  of  the  assets,  where  he  be- 
lieved in  good  faith  that  his  appoint- 
ment was  valid.  Worth  v.  Pied- 
mont Bank,  121  N.  C.  343. 

The  court  has  jurisdiction  to  re- 
quire an  officer  of  a  corporation  who 
is  a  party  to  the  action  to  turn  over 
property  of  the  corporation  to  a  re- 
ceiver appointed  in  the  action;  and 
disobedience  thereof  renders  him  li- 
able for  contempt,  although  he  has  a 
lien  upon  the  property  and  the  judg- 
ment is  therefore  erroneous.  Ex 
parte  Tinsley,  37  Tex.  Grim.  App. 
517. 

Though  the  court  may  not  punish 
a  contempt  in  interfering  with  the 
possession  of  property  by  a  receiver, 
and  removing  a  Ijuilding  therefrom, 
by  imprisonment  of  indefinite  dura- 
tion, it  may  coerce  obedience  to  its 
order  to  restore  possession  to  the  re- 
ceiver and  return  the  house,  by  im- 
prisoning the  contumacious  party 
until  he  shall  comply.  Delozler  v. 
Bird,  123  N.  C.  689. 

To  punish  for  contempt  for  non- 
delivery to  a  receiver,  an  order  to 
deliver  is  a  necessary  prerequisite. 
Demand  alone  is  not  sufficient. 
Tinkey  v.  Langdon,  60  How.  Pr.  180. 

47 


51 


RECEIVERSHIPS— SUPPLEMENT. 


Surrender  of  possession. 

A  court  having  possession  of  the 
property  of  a  corporation  operating 
a  street  railway  will  not  by  the  pos- 
session of  its  receiver  prevent  the 
city  from  taking  such  course  with 
respect  to  a  remedy  as  it  may  be  ad- 
vised, where  if  the  receivership  is  re- 
moved the  city  may  urge  reasonable 
arguments  in  support  of  its  right  to 
oust  the  company  from  occupation  of 
its  streets;  but  will,  where  the  com- 
pany is  a  mere  tenant  at  will  in  the 


streets,  order  redelivery  by  the  re- 
ceiver of  possession  of  the  tracks  and 
property  in  the  streets,  and  let  the 
company  take  the  risk  of  operating 
the  invalid  portions  of  its  road,  and 
the  city  that  of  any  course  it  may  see 
fit  to  pursue.  Louisville  Trust  Co. 
V.  Cincinnati  Inclined  Plane  R.  Co. 
78  Fed.  Rep.  307. 

Possession  may  be  delivered  to 
mortgagees  where  it  is  shown  that 
the  property  is  not  worth  more  than 
the  mortgages.  Scott  v.  Crawford, 
IG  Tex.  Civ.  App.  477. 


Page  136,  sec.  51. — As  to  tenants;  rents. 


A  receiver  may  be  appointed  for 
rents  until  the  devisee's  title  vests. 
Rogers  v.  Ross,  4  Johns.  Ch.  388; 
Pritchard  v.  Flecticood,  1  Meriv.  55. 

A  mortgagee  of  land  is  entitled  as 
against  subsequent  mortgagees  to 
the  appointment  of  a  receiver  of  the 
rents  and  profits  pendente  lite,  where 
he  shows  that  his  security  is  preca- 
rious and  liable  to  prove  inadequate. 
Ross  V.  Vernam,  G  App.  Div.  246. 

A  person  taking  possession  of 
mortgaged  property,  knowing  of  the 
mortgage  and  that  the  mortgagor 
cannot  pay,  may  be  required  to  sur- 
render or  pay  rent  to  a  receiver  ap- 
pointed to  collect  the  rents  and 
profits  for  the  benefit  of  the  mort- 
gagee. Mutual  L.  Ins.  Co.  v.  Spicer, 
12  Hun,  117. 

It  is  the  duty  of  a  receiver  to  col- 
lect rents,  but  not  to  assume  the 
management  of  actions.  Callaghan 
V.  Reardon,  Sausse  &  S.  682. 

A  receiver  is  entitled  to  rents  in 
arrears.  Codrington  v.  Johnstone,  1 
Beav.  524. 

The  court  cannot,  on  the  appli- 
cation of  a  receiver,  remit  rents  or 
make  reductions.  Robinson  v.  Shear- 
er, Hayes  &  J.  799. 

An  estate  by  the  curtesy  will  pass 
to  a  receiver  and  entitle  him  to  rent. 
Beamish  v.  Holt,  2  Robt.  307. 

A  receiver  cannot  enforce  rent  by 
attachment  from  a  lessee  who  has 
assigned  his  interest.  Cane  v. 
Bloomfield,  1  Hogan,  345. 

A  receiver  is  entitled  to  the  ar- 
rears of  rent  unpaid  when  the  order 
48 


of  reference  is  made.  Hollier  V. 
Hedges,  2  Ir.  Ch.  Rep.  370. 

A  receiver  is  not  entitled  to  rents 
due  at  the  time  of  the  appointment. 
M'Loughlin  v.  Longan,  4  Ir.  Eq.  Rep. 
325. 

A  tenant  may  be  required  to  pay 
rent  to  a  receiver.  Hobson  v.  Sher- 
wood, 19  Beav.  575. 

If  a  tenant  has  once  paid  rent  to  a 
receiver,  a  letter  demanding  subse- 
quent rent  is  all  that  is  necessary. 
Broicn  v.  O'Connor,  2  Hogan,  77. 

N.  Y.  Code  Civ.  Proc.  §  2468,  con- 
strued with  reference  to  rents  of 
realty  not  occupied  by  debtor.  Ver- 
mont Marble  Co.  v.  Wilkes,  62  N.  Y. 
S.  R.  121. 

After  filing  notice  of  lis  pendens 
in  Wisconsin  in  a  foreclosure  pro- 
ceeding a  tenant  has  no  right  to  pay 
a  year's  rent  in  advance,  and  on  the 
subsequent  appointment  of  a  receiv- 
er will  be  required  to  surrender  or 
pay  rent.  Oaynor  v.  Blewett,  82 
Wis.  313. 

A  motion  for  an  order  requiring 
the  tenants  of  mortgaged  premises 
to  surrender  possession  to  the  tem- 
porary receiver  appointed  in  a  fore- 
closure action  under  N.  Y.  Code  Civ. 
Proc.  §  714,  cannot  be  resisted  on  the 
ground  that  the  owner  of  the  equity 
of  redemption  has  not  been  served 
with  summons  and  complaint,  where 
an  order  for  publication  of  the  sum- 
mons against  her  has  been  made. 
Citizens'  Sav.  Bank  v.  Wilder,  11 
App.  Div.  63. 

Order  against  husband  and   wife 


EECEIVER'S  POSSESSION". 


§  51 


to  pay  rents,  when.  Dugro  v.  Vande- 
tcater,  35  App.  Div.  471. 

A  contractor  who  constructs  a 
building  under  a  contract  with  a  re- 
mainderman appointed  by  the  court 
under  the  Kentucky  statute  as  an 
agent  for  otlier  remainderrccn  cannot 
hold  the  other  remaindermen  person- 
ally liable,  or  have  a  mechanic's  lien 
for  the  amount  duo  him  in  excess  of 
that  which  he  has  received  from  the 
proceeds  of  a  loan  which  such  agent 
was  directed  to  make  for  the  pur- 
poses of  improvement,  though  the 
court  may,  as  a  matter  of  equity,  ap- 
point a  receiver  to  apply  the  rents 
for  his  reimbursement.  Rudd  v.  Lit- 
tell,  20  Ky.  L.  Rep.  162.  Modifying 
on  Rehearing  20  Ky.  L.  Rep.  158. 

A  receiver  of  land  directed  to  be 
sold  may  be  appointed  by  the  court 
to  collect  the  rents  and  hold  the  same 
subject  to  further  order  of  the  court, 
although  there  has  been  no  appeal 
from  judgment  directing  the  sale, 
where  a  stay  of  execution  has  been 
obtained  until  the  decision  of  a  mo- 
tion for  new  trial.  Ereling  v.  Kre- 
ling,  118  Cal.  413. 

A  receiver  to  collect  the  rents  and 
profits   of   mortgaged   premises   and 


apply  them  on  the  mortgage  indebt- 
edness will  be  appointed  where  the 
mortgagor  in  possession  is  insolvent, 
and  has  failed  to  pay  the  taxes  and 
costs  of  insurance,  and  there  is  a 
question  as  to  whether  the  mort- 
gaged premises  will  prove  adequate 
security  for  the  amount  of  the  mort- 
gage debt.  Winkler  v.  Magdeburg, 
100  Wis.  421. 

A  receiver  is  properly  appointed 
to  receive  the  rents  of  land  during 
the  pendency  of  a  foreclosure  suit 
under  a  contract  for  its  purchase, 
and  should  pay  over  the  amount 
thereof  to  the  complainant  in  such 
suit,  where  the  purchaser  seeks  to 
avoid  the  payment  or  the  purchase 
price,  and  the  contract  provides  that 
on  the  failure  of  the  purchaser  to 
pay  any  instalment  when  due  the 
A'endor  may  re-enter  and  repossess 
the  premises.  Belding  v.  Meloche, 
113  Mich.  223. 

In  an  application  for  an  injunc- 
tion to  restrain  certain  parties  from 
collecting  rents  from  real  estate  in 
which  bankrupts  have  any  legal  in- 
terest, injunction  should  be  granted 
and  a  receiver  appointed.  Keenan 
V.  Shannon,  9  Nat.  Bankr.  Reg.  441, 


Page  140. — Receiver's  title. 


A  receiver  does  not  occupy  the  po- 
sition of  an  innocent  bona  fide  holder 
for  value.  Briggs  v.  Merrill,  58 
Barb.  389. 

A  receiver  acquires  title  by  legal 
process,  and  not  in  the  regular 
course  of  dealing  in  commercial 
paper.  Briggs  v.  Merrill,  58  Barb. 
389;  Dubois  v.  Cassidy,  75  N.  Y.  298. 

A  receiver's  title  is  no  better  than 
the  corporation  he  represents.  Cut- 
ting V.  Damerel,  88  N.  Y.  410. 

A  transfer  by  order  of  court  to  a 
receiver  is  not  governed  by  the  Cal- 
ifornia insolvent  act  of  1852.  Naglee 
V.  Lyman,  14  Cal.  450. 

A  judgment  in  an  action  brought 
to  enforce  the  right  of  a  creditor  to 
have  his  debt  paid  out  of  the  defend- 
ant's property,  though  in  fact  in  fa- 
vor of  a  receiver  appointed  by  an 
interlocutory  judgment,  does  not 
vest    in    the    receiver    any    interest 


which  may  be  ordered  sold  by  the  re- 
ceiver, but  he  must  collect  the  judg- 
ment, if  possible.  Goldberg  v.  Sil- 
berstein,  19  App.  Div.  428. 

The  appointment  of  a  receiver  of 
a  corporation  which  has  made  an 
equitable  assignment  of  a  judgment 
to  be  recovered  against  stockholders 
will  give  such  receiver  no  right  to 
such  judgment  as  an  asset  of  the 
company.  Clark  v.  Sigua  Iron  Co. 
39  U.  S.  App.  753,  81  Fed.  Rep.  310, 
26  C.  C.  A.  423. 

Property  in  factor's  hands. 

The  receiver  of  a  corporation  suc- 
ceeds to  the  title  of  property  of  the 
corporation  in  possession  of  a  factor, 
subject  to  tlie  lien  for  advances  in 
favor  of  the  latter  with  which  it  was 
bui'doned  before  his  appointiuent. 
Cameron  v.  Crouse,  11  App.  Div. 
391. 

49 


§58 


RECEIVERSHIPS— SUPPLEMENT. 


Property  previously  transferred. 

A  receiver  acquires  no  interest  in 
property  previously  transferred  by 
the  debtor  by  virtue  ot  the  order  ap- 
pointing him,  but  merely  a  right  of 
action  to  set  aside  the  transfer,  if  it 
was  in  fraud  of  creditors.  Thomas 
V.  Van  Meter,  164  111.  304. 

Insurance  policies. 

The  duly  appointed  and  qualified 
receiver  of  a  debtor  is  vested  with 
the  legal  title  to  insurance  policies 
payable  to  the  debtor  or  his  estate. 
Reynolds  v.  JEtna  L.  Ins.  Co.  28  App. 
Div.  591. 

Title  of  foreign  receiver. 

In  New  York  the  title  of  a  foreign 
receiver  is  upheld  on  the  principle  of 
comity.  If  the  title  is  by  virtue  of 
a  voluntary  conveyance  or  transfer  it 
is  sustained  as  against  all,  includ- 
ing even  domestic  creditors ;  but  if 
it  depends  on  a  foreign  statute  or 
judgment  it  is  sustained  against  all 
except  domestic  creditors.  Subject 
to  their  superior  rights  the  receiver 
can  reduce  to  possession  all  the 
property  of  the  defendant  in  that 
state,  and  can  bring  replevin  for  that 
purpose,  or  trover  to  recover  dam- 
ages for  conversion.  Notes  and  ac- 
counts may  be  collected  by  the  ordi- 
nary proceedings,  the  court  regard- 
ing the  receiver  as  representing  the 
original  owner  and  opening  their 
doors  to  him  as  they  do  to  a  domes- 
tic receiver.  Mabon  v.  Ongley  Elec- 
tric Co.  156  N.  Y.  190;  citing  Barth 
V.  Backus,  140  N.  Y.  230,  23  L.  R.  A. 
47 ;  Vanderpoel  v.  Gorman,  140  N. 
Y.  563,  24  L.  R.  A.  548 ;  Toronto  Gen- 
eral Trust  Co.  v.  Chicago,  B.  &  Q.  R. 
Co.  123  N.  Y.  37 ;  Re  Waite,  99  N.  Y. 
433 ;  Ockerman  v.  Cross,  54  N.  Y.  29 ; 
Petersen  v.  Chemical  Bank,  32  N.  Y. 
21,  88  Am.  Dec.  298;  Willitts  v. 
Waite,  25  N.  Y.  577 ;  Hoyt  v.  Thomp- 
son, 19  N.  Y.  207;  Hoyt  v.  Thomp- 
son, 5  N.  Y.  320;  'New  Jersey  Pro- 
tection &  Lombard  Bank  v.  Thorp, 
6  Cow.  47;  Runk  v.  St.  John,  29 
Barb.  585;  Pugh  v.  Hurtt,  52  How. 
Pr.  22;  Middlebrook  v.  Merchant's 
Bank,  3  Keyes,  135;  Smith  v.  Tif- 
fany, 16  Hun,  552. 

And  every  remedy  will  be  afforded 
60 


to  gather  in  the  assets,  unless  it 
would  interfere  with  the  policy  of 
the  state  or  impair  the  rights  of  its 
own  citizens.  A  state  that  does  not 
discriminate  between  its  own  citi- 
zens and  those  of  a  foreign  state  dis- 
charges all  the  obligations  required 
by  the  rule  of  curtesy.  Mabon  v. 
Ongley  Electric  Co.  150  N.  Y.  190. 
A  foreign  receiver  has  no  title  to 
property  of  the  debtor  in  Wisconsin, 
and  cannot  maintain  an  action  to  set 
aside  a  fraudulent  conveyance.  Fil- 
kins  V.  Nunnemacher,  81  Wis.  91. 

To  terminals. 

Where  a  railroad  obtains  a  lease 
of  terminal  facilities  in  a  city,  and 
then  leases  its  road,  including  such 
facilities,  after  which  a  receiver  is 
appointed  for  it,  which  results  in  dis- 
solution of  the  latter  lease,  if  the 
receiver  procures  insurance  on  the 
property  included  in  such  terminal 
facilities  "on  account  of  whom  it 
may  concern;  loss  payable  to  re- 
ceivers," he  has  such  title  as  enables 
him  to  sue  on  the  policy.  Liverpool 
<C-  L.  &  G.  Ins.  Co.  V.  McNeill,  59  U. 
S.  App.  499,  89  Fed.  Rep.  131,  32  C. 
C.  A.  173. 

Property  in  another  state. 

A  conveyance  of  the  property  of  a 
corporation  to  a  receiver,  under  a  de- 
cree which  three  quarters  of  its 
shareholders  had  sought  and  none 
opposed,  is  to  be  deemed  voluntary 
for  the  purpose  of  determining  its 
effect  on  the  title  of  personal  prop- 
erty in  another  state.  Ward  v.  Con- 
necticut Pipe  Mfg.  Co.  71  Conn.  345, 
42  L.  R.  A.  706. 

Where  receivers  of  an  insolvent 
Pennsylvania  corporation  have  taken 
possession  of  all  its  property  and 
assets,  a  Massachusetts  creditor  can- 
not attach  its  property  in  New  Jer- 
sey. The  property  has  passed  to  the 
receivers.  Merchants'  Nat.  Bank  v. 
Pen7isylvania  Steel  Co.  57  N.  J.  L. 
336;  Weil  v.  Bank  of  Burr  Oak,  76 
Mo.  App.  34. 

Deposits  of  a  foreign    building   so- 
ciety. 

Securities  deposited  by  a  foreign 
building    and   loan    association    "in 


RECEIVER'S   TITLE. 


§  58 


trust  for  the  benefit  and  security  of 
its  members  in  this  state,"  in  order 
to  obtain  the  right  to  do  business  in 
the  state  under  the  Wisconsin  stat- 
ute (Sanb.  &  B.  Ann.  Stat.  §§  2014a, 
2014b),  will  be  sold  or  collected  in 
case  of  insolvency  and  the  proceeds 
applied  according  to  the  trust,  and 
the  residue  only  turned  over  to  the 
receiver  appointed  in  the  state  of  in- 
corporation. Lewis  V.  American 
Sav.  d  L.  Asso.  98  Wis.  203,  39  L. 
R.  A.  559. 

Patents. 

A  receiver  under  R.  I.  Pub.  Stat. 
chap.  237,  §  13,  is  entitled  to  a  pat- 
ent right  of  the  debtor.  Reach  v. 
Chadicick,  14  R.  I.  571. 

Claims  assigned. 

A  receiver  who  has  duly  qualified 
is  vested  with  the  legal  title  to 
claims  which  have  been  assigned  by 
the  debtor  subsequent  to  the  filing 
of  the  order  appointing  the  receiver. 
Fitzpatrick  v.  Moses,  34  App.  Div. 
242. 

Exempt  property. 

An  assignment  to  a  receiver  should 
except  exempt  property.  Cagger  v. 
Hoicard,  1  Barb.  Ch.  368. 

Rents. 

The  right  to  collect  rent  passes  to 
a  receiver.  Stephen  v.  Reibling,  45 
111.  App.  40. 

Property  of  corporation. 

An  order  appointing  a  receiver  of 
a  corporation  gives  him  the  title  of 
the  property.  Dickey  v.  Bates,  13 
Misc.  489. 

Rights  of  action. 

A  right  of  action  passes  to  a  re- 
ceiver. Rand  v.  Wright,  141  Ind. 
220. 

Manufactured  articles. 

Articles  manufactured  for  re- 
ceivers belong  to  the  receivers  in 
trust  for  creditors  and  stockholders. 
Merchants'  Nat.  Bank  v.  Pennsyl- 
vania Steel  Co.  57  N.  J.  L.  330. 

Checks. 
The  appointment  of  a  receiver  of  a 


corporation  after  the  transmission  of 
a  check  to  it  in  payment  of  a  con- 
tract to  be  pertormed  by  it,  but  be- 
fore the  check  has  been  cashed,  does 
not  authorize  the  drawer  to  stop 
payment  on  the  check,  in  the  absence 
of  fraud.  Rouse  v.  Calvin,  76  111. 
App.  362. 

A  corporation  whose  checks  dur- 
ing the  illness  of  its  treasurer  are, 
without  further  authority  from  such 
treasurer  than  a  direction  to  the 
clerk  of  another  company  in  which 
he  was  a  stockholder  to  turn  one 
such  check  into  the  funds  of  the  lat- 
ter company,  taken  possession  of  by 
the  latter  company,  and  the  proceeds 
used  in  buying  goods  in  the  regular 
course  of  business,  may,  where  the 
latter  company  becomes  insolvent 
and  goes  into  the  hands  of  a  receiver, 
recover  from  such  receiver  the 
amount  of  the  checks  so  used.  York 
v.  York  Market  Co.  (N.  H.)  37  Atl. 
1038. 

Property  purchased  conditionally. 

The  receiver  of  a  corporation  to 
which  personal  property  is  sold  on 
condition  that  the  title  shall  pass 
only  on  payment  of  a  specified  price 
is  not  the  "personal  representative" 
of  the  corporation,  within  Conn. 
Pub.  Acts  1895,  chap.  212,  §  2,  pro- 
viding that  all  conditional  sales  of 
personal  property  which  are  not 
made  in  conformity  with  the  provi- 
sions of  §  1  shall  be  held  to  be  ab- 
solute sales,  except  as  between  the 
vendor  and  the  vendee  or  their  per- 
sonal representatives,  and  all  such 
property  shall  be  subject  to  attach- 
ment and  execution  for  the  debts  of 
the  purchaser  the  same  as  any  other 
unexempt  property.  Re  Wilcox  & 
H.  Co.  70  Conn.  220. 

Legal  and  equitable  interests. 

Under  the  English  judicature  act 
of  1873  a  receiver  may  be  appointed 
over  the  whole  of  plaintiff's  security, 
both  legal  and  equitable.  Pease  v. 
Fletcher,  L.  R.  1  Ch.  Div.  273. 

Insurance  money. 

Insurance  money  for  property  ex- 
empt destroyed  by  fire  docs  not  pass 
to  the  receiver.     It  is  after-acquired 

51 


58 


RECEIVERSHIPS— SUPPLEMENT. 


property.     Sands  v.  Rohc7-ts,  8  Abb. 
Pr.  343. 

Scat  in  cotton  exchange. 

The  right  to  a  seat  in  the  New 
York  Cotton  Exchange  passed  to  the 
receiver  under  supplementary  pro- 
ceedings, and  he  may  redeem  the 
same  from  a  pledgee.  Powell  v. 
Waldron,  89  N.  Y.  328,  42  Am.  Rep. 
301. 

Joint  property. 

One  of  the  parties  to  an  action  for 
the  appointment  of  a  receiver,  who 
concedes  that  it  is  proper  to  appoint 
a  receiver  to  take  charge  of  and  sell 
property  belonging  jointly  to  the 
parties,  and  divide  the  proceeds  be- 
tween them,  may  properly  be  re- 
quired to  pay  over  to  the  receiver 
money  in  his  hands,  arising  from  a 
sale  by  him  of  other  property  which 
had  belonged  to  himself  and  the  oth- 
er party,  the  title  to  which  they  had 
derived  by  virtue  of  the  same  trans- 
action as  that  by  which  they  ac- 
quired the  ownership  of  the  property 
turned  over  to  the  receiver,  where 
there  has  been  no  accounting  and 
settlement  as  to  the  property  sold. 
Whitley  v.  Berry,  105  Ga.  251. 

Securities  deposited  with  state. 

The  receiver  of  an  insolvent  life 
insurance  company  has  no  right  to 
the  securities  deposited  with  the  su- 
perintendent of  the  insurance  de- 
partment. Ruggles  v.  Chapman,  59 
N.  Y.  1G3.  See  People,  Ruggles,  v. 
Chapman,  64  N.  Y.  557. 

Property     purchased     with     bank's 
money. 

The  receiver  of  a  national  bank  is 
entitled  to  a  surrender  of  such  prop- 
erty as  has  been  purchased  with 
money  of  the  bank.  If  it  can  be 
shown  that  money  in  a  general  fund 
belonged  to  the  bank,  and  was  ap- 
propriated to  buy  property,  it  may 
be  reached.  Peters  v.  Bain,  133  U. 
S.  670,  33  L.  ed.  696. 

Title  not  impeached. 

The  title  of  a  receiver  cannot  be 
impeached  by  a  third  party  for  ir- 
regularity prior  to  the  assignment 
52 


to  the  receiver.     Richards  v.  Allen, 
3  E.  D.  Smith,  399. 

Title  if  debtor  dies. 

The  death  of  the  judgment  debtor 
before  the  appointment  of  a  receiver 
in  supplementary  proceedings  pre- 
vents title  vesting  in  the  receiver, 
and  lien  on  the  property.  Rankin 
V.  Minor,  72  N.  C.  424. 

Title  pendente  lite. 

The  appointment  of  a  receiver 
pendente  lite  of  a  corporation  does 
not  devest  the  corporation  of  title 
to  the  property  undisposed  of  by  the 
receiver,  so  as  to  prevent  it  from 
maintaining  an  action  to  recover  for 
the  loss  of  merchandise  occasioned 
by  the  negligence  of  a  common  car- 
rier. Mutual  Brewing  Co.  v.  New 
York  &  C.  P.  Ferry  Co.  16  App.  Div. 
149. 

A  temporary  receiver  of  a  corpora- 
tion, appointed  under  N.  Y.  Code  Civ. 
Proc.  §  2423,  to  collect  and  receive 
debts,  and  preserve  the  property, 
and  sell  or  otherwise  dispose  of  the 
property  as  directed  by  the  court, 
is  not  within  N.  Y.  Laws  1883,  chap. 
378,  §§  2,  3,  relating  to  receivers  of 
corporations  appointed  imder  stat- 
utory authority,  where  the  title  to 
the  property  is  vested  in  such  receiv- 
ers. Smith  V.  Eighth  Ward  Batik, 
31  App.  Div.  6. 

The  title  to  the  property  of  a  gas- 
light company  obtaining  its  fran- 
chises from  the  city  does  not  pass 
to  a  receiver  pendente  lite.  Brook- 
lyn V.  Jourdan,  7  Abb.  N.  C.  23. 

A  receiver  pendente  lite  takes  no 
title,  but  possession  only.  He  has 
no  right  to  sue  to  recover  property. 
Feller  v.  Maddock,  11  Misc.  297. 

A  receiver  jiendente  lite  has  only 
the  right  to  the  possession  of  the 
property  in  controversy  as  an  officer 
of  the  court,  the  title  thereto  re- 
maining where  it  was  when  the  re- 
ceiver was  appointed.  Devlin  v. 
New  York,  4  Misc.  106. 

Land  held  in  trust. 

Land  held  in  trust  does  not  pass 
to  the  receiver  so  that  he  may  sell 
the  same.  Jackson  v.  Horton,  126 
111.  566. 

A    receiver   in   supplemental    pro- 


RECEIVER'S   TITLE. 


§  58 


ceedings  has  no  interest  in  real  es- 
tate held  in  trust  for  the  debtor. 
Boid  V.  Dean,  48  N.  J.  Eq.  193. 

Land  sold  for  taxes. 

No  valid  title  can  be  acquired  at 
a  sale  for  taxes  of  land  which  is  in 
possession  of  a  receiver.  Virpinia 
T.  &  G.  Steel  d  I.  Go.  v.  Bristol  Land 
Co.  88  Fed.  Rep.  134. 

Supplementary  proceedings. 

A  receiver  appointed  in  a  common 
law  court  in  supplementary  pro- 
ceedings is  vested  in  New  Jersey  to 
title  to  personalty  only.  Skinner  v. 
Terhune,  45  N.  J.  Eq.  565. 

Property  subsequently  acquired. 

A  receiver  takes  no  title  to  prop- 
erty acquired  after  appointment. 
Norcross  v.  Hollingsworth,  83  Hun, 
127. 

A  receiver  acquires  title  only  to 
property  of  debtor  owned  at  the  time 
the  proceeding  was  instituted.  Gamp- 
hell  V.  Genet,  2  Hilt.  290. 

Proceeds  of  sale. 

The  receiver  of  an  insolvent  cor- 
poration has  no  interest  in  the  dis- 
tribution of  the  money  arising  from 
the  sale  of  premises  mortgaged  by 
the  corporation  to  protect  an  in- 
dorser  of  notes  for  the  corporation, 
where  such  indorser  has  the  right  to 
foreclose  the  mortgage.  Miller  v. 
Miller  Knitting  Go.  23  Misc.  404. 

When  title  vests. 

A  mere  order  of  appointment  of  a 
receiver  does  not  confer  upon  him 
title  to  the  property  of  the  debtor. 
Thomas  v.  Van  Meter,  164  111.  304. 

In  New  York  the  title  of  debtor 
vests  in  the  receiver  on  his  appoint- 
ment, as  to  personalty,  but  not  as  to 
realty.  People,  Williains,  v.  Hul- 
hurt,  5  How.  Pr.  446. 

In  supplemental  proceedings  the 
receiver  is  vested  with  title  to  the 
property  and  effects  of  the  debtor 
from  the  time  of  filing  the  orders. 
Rofic  V.  Hater,  99  N.  C.  323. 

The  title  of  a  receiver  relates  to 
the  entry  of  the  order  of  appoint- 
ment, and  not  to  tiic  approval  of  the 
bond.     Connecticut   River  Bkg.    Co. 


V.  Rockbridge,  Co.  73  Fed.  Rep.  709; 
Maynard  v.  Bond,  67  Mo.  315. 

Auxiliary  receiver. 

An  auxiliary  receiver  of  a  foreign 
corporation  is  a  mere  custodian  of 
the  property  to  preserve  the  same, 
and  has  only  the  power  conferred  by 
the  order  appointing.  Buckley  v. 
Harrison,  10  Misc.  683. 

An  auxiliary  receiver  is  not  the 
holder  of  the  legal  title,  and  is  not 
entitled  to  disaffirm  fraudulent 
transfers.     Ihid. 

Title  suhject  to  defenses. 

A  receiver  of  a  bank  holds  a  note 
and  mortgage  taken  by  the  bank  or 
for  its  benefit  subject  to  the  same 
defenses  that  applied  to  the  bank  it- 
self. Hatch  V.  Johnson  Loan  &  T. 
Co.  79  Fed.  Rep.  828. 

Contest  hy  nonresidents. 

Nonresident  creditors  of  a  corpo- 
ration in  the  hands  of  a  receiver, 
when  they  are  not  residents  of  the 
state  in  which  the  receiver  is  ap- 
pointed, have  the  same  right  to  con- 
test the  receiver's  title  to  property 
that  domestic  creditors  have.  Lin- 
ville  V.  Hadden  (Md.)  43  L.  R.  A. 
222. 

Property  pledged. 

The  court  cannot  compel  a  cred- 
itor to  turn  over  to  a  receiver  prop- 
erty which  was  pledged  to  secure  a 
loan  when  it  was  solvent.  National 
Exch.  Bank  v.  Benhrook  School  Fur- 
nishing Co.  (Tex.  Civ.  App.)  27  S. 
W.  297. 

Money  on  deposit. 

Money  deposited  with  a  banker, 
derived  from  the  sale  by  the  sheriff 
on  attachments  on  which  he  was  to 
pay  interest,  where  the  pledgee  sub- 
sequently fails  and  assigns  for  the 
benefit  of  creditors,  will  not  be  or- 
dered turned  over  to  a  subsequent 
receiver.  Coleman  v.  Salisbury,  52 
Ga.  470. 

Trust  funds. 

The  amount  collected  on  claims 
due  a  corporation,  by  its  bookkeeper 
under  an  agreement  between  the  cor- 

53 


§  69 


RECEIVERSHIPS— SUPPLEMENT. 


poration  and  a  bank  that  the  claims 
shall  be  set  aside  and  used  to  reim- 
burse the  bank  for  advancements, 
and  as  a  matter  of  convenience  shall 
be  collected  by  the  bookkeeper  and 
be  under  his  control,  is  impressed 
with  an  equitable  trust  in  favor  of 
the  bank  as  against  a  receiver  of  the 
corporation.  Atlantic  Trust  Co.  v. 
Carbondale  Coal  Co.  99  Iowa,  234. 

By  assignment. 

By  an  assignment  directed  by  the 
court  the  legal  title  passes  inde- 
pendent of  the  appointment.  Weller 


V  J.  B.  Pace  Tobacco  Co.  2  N.  Y. 
Supp.  292. 

An  assignment  to  a  receiver  is  in 
the  nature  of  a  mortgage,  and  falls 
as  soon  as  the  object  of  the  suit  is  ac- 
complished, and  no  reassignment  is 
necessary.  Anderson  v.  Treadwell, 
1  Edm.  Sel.  Cas.  201. 

Where  stock  in  a  corporation  is 
ordered  to  be  assigned  to  a  receiver, 
and  a  power  of  attorney  given  to  the 
receiver,  and  this  is  done,  the  receiv- 
er is  vested  with  the  legal  title. 
Weller  v.  J.  B.  Pace  Tobacco  Co.  2 
N.  Y.  Supp.  292. 


Page   152,  sec.  69. — Suits  by  receivers;   authority  of  the   court 

necessary. 


A  receiver  cannot  sue  without 
leave  of  the  court  appointing  him. 
Vigo  Real  Estate  Co.  v.  Reese,  21 
Ind.  App.  20. 

Where  debt  is  due  the  receiver  of- 
ficiallv.  Bowen  v.  Needles  Nat. 
Banlc^  76  Fed.  Rep.  176. 

Where  waste  has  been  committed. 
Nangle  v.  Fingall,  1  Hogan,  142. 

Leave  is  in  discretion  of  the 
court.  Wisener  v.  Myers,  3  Pa. 
Dist.  R.  687 ;  South  Carolina  R.  Co. 
V.  People's  Sav.  Inst.  64  Ga.  18; 
Conipton  v.  Schwabacher  Bros.  & 
Co.  15  Wash.  306;  Gadsden  v. 
Whaley,  14  S.  C.  210. 

When  entitled  to  sue.  Forker  v. 
Brown,  10  Misc.  161;  Woods  v.  Ellis, 
85  Va.  471. 

The  receiver  does  not  represent 
creditors  securing  the  appointment, 
under  X.  Y.  Code,  §  317,  authorizing 
a  recovery  for  costs  and  making 
them  collectable  out  of  the  estate, 
fund,  or  party  represented.  McHarg 
V.  Donelly,  27  Barb.  100. 

The  receiver  will  be  required  to 
bring  an  independent  suit  to  deter- 
mine the  rights  of  third  parties  to 
property.  Colton  v.  Bigeloic,  41  N. 
J.  L.  266;  Bowery  Sav.  Bank  v. 
Richards,  3  Hun,  366. 

And  to  recover  property  in  posses- 
sion of  his  predecessor.  Holland 
Trust  Co.  V.  Consolidated  Gas  &  E. 
L.  Co.  85  Hun,  454. 

And  to  set  aside  a  levy  on  receiv- 
ership property  made  after  his  ap- 
54 


pointment  and  before  qualification. 
Andrews  v.  Paschen,  67  Wis.  413. 

And  to  recover  money  received 
by  a  creditor  from  a  bank  after  his 
appointment.  State  Bank  v.  First 
Nat.  Bank,  34  N.  J.  Eq.  450,  458. 

The  right  of  a  person  not  a  party 
to  the  suit  cannot  be  devested  in  a 
summary  proceeding.  Nason  v. 
Blennerhassett,  1  Hogan,  402. 

The  remedy  of  the  receiver  under 
the  New  York  Code  of  Civil  Proced- 
ure is  not  to  move  to  vacate  or  mod- 
ify an  attachment,  but  by  equitable 
actions.  Ross  v.  Wigg,  100  N.  Y. 
243. 

Where  the  books  of  a  corporation 
have  by  means  of  mesne  convey- 
ances passed  to  a  third  party,  the 
receiver  of  the  corporation  can  only 
obtain  possession  by  an  action 
against  the  present  owner,  and  not 
by  summary  proceedings.  Olmsted 
v.  Rochester  d  P.  R.  Co.  46  Hun,  552. 

A  receiver  has  such  special  and 
qualified  interest  in  property  of 
which  he  acquires  possession  that 
he  may  maintain  an  action  for 
wrongful  taking  and  conversion,  but 
he  cannot  do  so  if  he  has  never  ac- 
quired possession.  Kehr  v.  Hall, 
117  Ind.  405. 

The  directors  of  a  corporation 
have  no  standing  by  virtue  of  their 
relation  as  parties  to  the  contem- 
plated action,  and  independently  of 
their  interest  as  stockholders  to  con- 
serve the  assets  of  the  corporation, 


SUITS  BY  RECEIVERS— DEFENSES  TO. 


^,S  72,  73 


to  resist  an  application  by  a  receiver 
for    leave   to    sue    them.     People  v. 


Commercial  Bank,  G  App.  Div.  194; 
Kimiall  v.  Ives,  30  Hun,  568. 


Page  160,  sec.  72. — Receiver's  power  to  sue  in  his  own  name. 


A  receiver  may  sue  in  his  own 
name.  Davis  v.  Industrial  Mfg.  Go. 
114  N.  C.  321,  23  L.  R.  A.  322; 
Ueland  v.  Eaugan,  70  Minn.  349; 
Cockrill  V.  Cooper,  58  U.  S.  App. 
C48,  suh  nom.  Cockrill  v.  Aheles,  86 
Fed.  Rep.  505,  30  C.  C.  A.  226;  Na- 
tional Bank  of  the  Metropolis  v.  Ken- 
nedy, 17  Wall.  19,  21  L.  ed.  554. 


Power  to  sue  in  his  own  name  may 
be  granted.  Eardwick  v.  Eook,  8 
Ga.  354. 

A  receiver  has  no  power  to  sue  in 
his  own  name.  State,  Fichtenkamm, 
V.  Gambs,  68  Mo.  289,  296. 


Page  163,  sec.  73. — Power  of  receivers  to  sue  in  foreign  jurisdiction. 


See  Schultz  v.  Phenix  Ins.  Go. 
77  Fed.  Rep.  375;  Eoicarth  v.  Ell- 
wanger,  86  Fed.  Rep.  54;  Wyman 
V.  Eaton,  107  Iowa,  214,  43  L.  R.  A. 
695;  Bale  v.  Eardon,  89  Fed.  Rep. 
283;  Johnston  v.  Rogers,  19  Ky.  L. 
Rep.  1272 ;  Merchants'  Nat.  Bank  v. 
McLeod,  38  Ohio  St.  174. 

Suit  to  enjoin. 

An  action  will  lie  by  the  receiver  of 
a  national  bank  to  restrain  the  pros- 
ecution of  suits  by  a  large  number 
of  persons  having  in  their  possession 
pass  books  purporting  to  have  been 
issued  by  the  bank,  but  which  were  in 
fact  issued  by  another  bank,  and  to 
have  the  pass  books  canceled  and 
surrendered,  and  an  adjudication 
that  the  receiver  is  not  liable  there- 
for, and  a  determination  of  the 
rights  and  liabilities  of  the  respec- 
tive parties,  under  the  principles  ap- 
plicable to  a  bill  of  peace  for  the 
prevention  of  a  multiplicity  of  suits. 
Kellogg  v.  Siple,  11  App.  Div.  458. 

A  receiver  under  lease  may  enjoin 
a  sublessee  from  doing  an  act  where- 
by the  title  of  his  lessor  would  be 
affected.  Mason  v.  Mason,  Flan.  & 
K.  429. 

Where  plaintiff  in  a  foreclosure 
suit  is  not  a  party  to  the  action  in 
which  a  receiver  is  appointed,  he  can- 
not be  enjoined  by  the  latt^^r.  Wal- 
ton V.  Grand  Belt  Copper  Go.  56  Hun, 
211. 

The  receiver  of  a  railroad  cannot 


enjoin  proceedings  in  admiralty 
growing  out  of  collision  of  a  vessel. 
Damages  in  such  case  cannot  be  con- 
veniently, if  at  all,  applied  in  courts 
of  equity  or  law.  Paxson  v.  Cun- 
ningham, 21  U.  S.  App.  466,  63  Fed. 
Rep.  132,  11  C.  C.  A.  111. 

Substitution  of  receiver. 

The  receiver  of  a  national  bank  is 
entitled  to  be  substituted  as  sole  de- 
fendant in  all  actions  pending  at  the 
time  of  his  appointment.  The  bank 
after  the  appointment  cannot  appeal 
a  case  pending.  Sioux  Falls  Nat. 
Bank  v.  First  Nat.  Bank,  6  Dak.  113, 
Reversed  on  other  grounds  in  150  U. 
S.  231,  37  L.  ed.  1063. 

An  application  by  a  receiver  of  a 
corporation  which  has  not  been  dis- 
solved, to  be  substituted  for  the  cor- 
poration as  plaintiff  in  a  pending  ac- 
tion, is  properly  refused  in  the  exer- 
cise of  the  court's  discretion  under 
N.  Y.  Code  Civ.  Proc.  §  756,  where 
the  plaintiff's  attorney  has  a  much 
larger  money  interest  in  the  recov- 
ery than  the  plaintiff  or  its  receiver, 
and  the  attorney  of  the  defendant 
was  instrumental  in  having  the  re- 
ceiver appointed.  Shaped  Seamless 
Stocking  Go.  v.  Snow  Church  Go.  19 
Misc.  421. 

The  receiver  of  a  corporation  ap- 
pointed in  an  action  by  a  judgment 
creditor  for  the  sequestration  of  its 
property  is  not  entitled  as  of  right  to 
be  substituted  for  the  corporation  as 

55 


§  73 


rtECElVERSHIPS— SUPPLEMENT. 


^•^w'.-.- 


plaintiff  in  a  pending  action,  but  the 
application  for  such  relief  is  within 
N.  Y.  Code  Civ.  Pioc.  §  750,  under 
which  the  order  of  substitution  is 
discretionary.     Ibid. 

To  justify  the  substitution  of  a  re- 
ceiver as  plaintiff,  so  much  of  the 
record  as  estiiblishes  the  fact  of  due 
apiK)intnient  and  qualification  is  all 
that  is  required.  Seymour  v.  New- 
man,  11  Mo.  App.  578. 

The  burden  of  proof  is  on  defend- 
ants in  au  action  by  a  bank,  where 
persons  claiming  to  have  been  ap- 
pointed receivers  of  the  bank  are  pe- 
titioning to  be  substituted  as  parties 
plaintiff,  and  produce  a  copy  of  the 
order  of  their  appointment,  attested 
by  the  clerk  and  under  seal  of  the 
court,  to  show  that  the  court  had  no 
jurisdiction  of  the  subject-matter  of 
the  appointment  of  receivers.     Ihid. 

The  receiver  is  entitled  to  be  sub- 
stituted  for   the   debtor   in  pending 
V«**'^uits.     Re  Wilds,  6  Abb.  N.  C.  307 ; 
V4f   Searcy  v.  Stubbs,  12  Ga.  437  ;  Kitt- 
^..■\edge  v.  Osgood,  161  Mass.  384. 

The  order   substituting  may  pro- 
vide that  the  receiver  shall  make  no 
,         change  in  attorneys  without  applica- 
tion to  the  court.     Re  Wilds,  6  Abb. 
N.  C.  307. 
,  •■.'■  In   an   action   begun   the   receiver 
may   continue   prosecution     without 
substitution,   so  long  as  there  is  no 
dissolution.     United  States  Vinegar 
■«    Co.  v.  Spamer,  143  N.  Y.  676. 

Foreign  receivers;  receivers  of  for- 
eign corporations. 

It  is  not  the  policy  of  Illinois  to 
|)ermit  foreign  receivers  to  remove 
from  its  jurisdiction  the  property  of 
foreign  corporations,  so  as  to  require 
its  citizens  to  go  into  a  foreign  juris- 
diction to  assert  their  rights.  Hunt 
V.  Gilbert,  54  111.  App.Vjl;  Hcycr 
V.  Alexander,  lOS  111.  3S5 :  May  v. 
First  Xat.  Bank,  122  111.  551 ;  Wood- 
ward V.  Brooks,  128  111.  222,  3  L.  R. 
A.  7t)2;  Henderson  v.  Schaas,  35  111. 
App.  155;  Webster  v.  Judah,  27  111. 
App.  294;  Ford  v.  Holbrook,  50  111. 
App.  547,  Affirmed  in  153  111.  633, 
27  L.  R.  A.  324. 

The  privilege  of  a  foreign  receiver 
to  exercise  extra-territorial  powers 
is  derived  wholly  from  the  doctrine 
of  comity,  and  this  comity  is  accord- 
56 


ed  except  where  domestic  policy  or 
rights  of  domestic  creditors  are  in- 
volved. Hunt  v.  Gilbert,  54  111.  App. 
491. 

A  foreign  receiver  may  prove  a 
debt  in  bankruptcy.  Ex  parte  Nor- 
tcood,  3  Diss.  504. 

A  foreign  receiver  cannot  by  cer- 
tificates bind  property  wholly  in  an- 
other state.  Pool  v.  Farmers  Loan 
d  T.  Co.  7  Tex.  Civ.  App.  334. 

The  expiration  of  the  period  of  lim- 
itation in  the  interval  between  the 
institution  of  a  suit  on  a  demand  by 
u  foreign  receiver  and  the  filing  of  an 
original  amended  petition  by  the 
creditors  after  the  discharge  of  the 
receiver  bars  the  action,  as  a  foreign 
receiver  cannot  sue  and  maintain  an 
action  in  Texas,  and  the  commence- 
ment of  the  suit  by  him  did  not  op- 
erate to  suspend  the  running  of  the 
statute.  Kellogg  v.  Lewis,  16  Tex. 
Civ.  App.  668. 

A  receiver  appointed  by  a  foreign 
court  to  settle  the  affairs  of  an  insol- 
vent partnership  is  not  entitled  to 
remove  partnership  assets  from  the 
state,  as  against  resident  garnishing 
creditors  of  the  partnership  or  of  its 
individual  members,  unless  it  ap- 
pears that  the  partnership  has  not 
been  settled,  and  that  the  fund  is 
needed  for  that  purpose  independent 
of  any  claim  of  the  debtor  partner 
thereto.  Grogan  v.  Egbert,  44  W. 
Va.  75. 

An  attachment  by  a  local  creditor, 
of  a  judgment  for  a  receiver  of  a  for- 
eign corporation  against  a  Pennsyl- 
vania corporation,  on  the  day  before 
issuance  of  execution  and  making  of 
the  levy,  entitles  him  to  the  fund  if 
sufficient  to  pay  the  attachment,  in 
preference  to  the  receiver,  as  the  lat- 
ter's  rights  are  no  higher  than  those 
of  the  corporation,  and  the  princi- 
ples of  interstate  comity  do  not  ap- 
ply when  the  attaching  creditor  is  a 
citizen  of  the  state.  Yerona  Tool 
Works  V.  E.  S.  Grecly  Co.  6  Pa.  Dist. 
R.  038. 

A  member  of  a  foreign  insolvent 
mutual  benefit  association  for  which 
a  receiver  has  been  appointed  in  the 
state  of  its  incorporation  will  not  be 
allowed  to  subject  property  of  the 
association  in  another  state  to  the 
payment  of  his  certificate,  which  ma- 


SUITS  BY  RECEIVERS— DEFENSES  TO. 


§  73 


tured  after  the  commencement  of  the 
receivership  action,  though  before 
the  receiver's  appointment,  but  will 
be  relegated  to  his  right  to  share  in 
the  distribution  of  the  assets  in  the 
receivership  action,  where  it  is  ap- 
parent that  he  will  be  accorded  such 
right  if  he  takes  proper  steps. 
Wheeler  v.  Dime  8av.  Bank,  116 
Mich.  271. 

The  doctrine  of  interstate  comity 
is  not  applicable  to  a  foreign  receiv- 
ership of  an  insolvent  partnership 
where  the  evidence  tends  to  show 
that  it  is  a  mere  cover  to  enable  a 
debtor  partner  to  dispose  of  his  own 
property  in  the  state  in  hindrance 
and  fraud  of  creditors;  but  such  re- 
ceivership will  be  deemed  void  as  to 
creditors  or  purchasers  for  value, 
without  notice.  Grogan  v.  Egbert, 
44  W.  Va.  75. 

Recognition  of  a  foreign  receiver  is 
by  comity.  Lett  v.  Thurber-Why- 
land  Co.  4  Pa.  Dist.  R.  239. 

A  foreign  receiver  has  recognition 
in  our  courts,  by  the  doctrine  of 
comity.  Falk  v.  Janes,  49  N.  J.  Eq. 
484. 

A  foreign  receiver  will  be  recog- 
nized by  comity  when  domestic  citi- 
zens are  not  affected.  Merchants 
^^at.  Bank  v.  McLeod,  38  Ohio  St. 
174. 

Where  by  the  rules  of  a  foreign 
mutual  benefit  society  the  reserve 
fund  in  the  local  branches  in  other 
states  is  under  the  control  of  the 
supreme  lodges,  and  a  receiver  is  ap- 
pointed in  the  home  state  of  the  cor- 
poration, and  ancillary  receivers  for 
the  branches,  equity  will  decree  that 
the  reserve  fund  of  the  local  branches 
in  the  hands  of  the  ancillary  receiv- 
ers be  turned  over  to  the  general  re- 
ceiver. Ware  v.  Supreme  Sitting, 
0.  of  I.  H.  (N.  J.  Eq.)  28  Atl.  1041. 

Where  members  of  an  association 
in  different  states  are  bound  by  a 
common  contract  and  the  court  at 
the  doiiiicil  appoints  a  .receiver  on 
account  of  insolvency,  trust  funds 
in  a  local  branch  may  be  turned  over 
to  the  home  receiver.  Durward  v. 
Jewett,  46  La.  Ann.  706. 

A  creditor  who  obtains  a  judg- 
ment in  Canada  against  property 
therein,  upon  a  contract  made  and 
performable  in    one    of    the  United 


on       ^ 


States,  between  parties  domiciled 
therein,  cannot  be  allowed  to  execute 
liis  judgment  against  property  of  the 
defendant  which  has  passed  into 
Canada,  where  one  of  the  conditions 
and  consequences  of  the  contract  un- 
der the  laws  of  the  state  is  that  the 
right  of  execution  and  sale  of  the 
property  of  the  defendant  shall  cease 
on  the  appointment  of  receivers,  and 
receivers  have  been  apointed  by  the 
courts  of  the  state.  Barker  v.  Cen- 
tral Vermont  R.  Co.  Rap.  Jud.  Que- 
bec, 13  C.  S.  2. 

Appointment    of. 

An  action  for  the  appointment 
a  receiver  of  a  foreign  corporation 
and  to  set  aside  an  assignment  m^  ^ 
be  made  without  previous  demand 
the  corporation.       Walter   v.   F.   %^.^ 
McAlister  Co.  21  Misc.  747.  /'"  ""■*" 

Whether  after  a  foreign  corpor 
tion  doing  business   in  New  Jersey 
has  passed  into  the  hands  of  a 
ceiver  in  the  state  of  its  domicil 
receiver  will  be  appointed  in  the 
mer    state,    and,  if   so,  whether    the 
domiciliary     receiver     will     be     ap- 
pointed there,  depend  on  the  amount 
and   kind   of   business    done   in 
state,  and  whether  any  special  inl 
est  of  the  creditors  or  citizens  in  | 
state  is  likely  to  be  involved  in  the 
settlement.     Irwin  v.  Granite  State 
Provident  Asso.  56  N.  J.  Eq.  244| 

A  temporary  receiver  for  a  foreija 
corporation  may  be  appointed  vd 
out  notice,    where    the    corporatimi     ^ 
has  no  authorized  agent  in  the  sJd^^^ 
upon    whom    notice    can    be    seited^J 
and  if  the  cause  is  delayed  until  wPI^ 
tice  can  be  had  by  publication!" 
the  assets  of  the  corporation  wi| 
the  state  will    have    been    remc 
from  the  jurisdiction  of  the  court. ' 
Security  Sav.  c6  L.  Asso.  v.  Moore, 
151  Ind.  174.  !■■■ 

An  action  by  a  stockholder  for  the 
appointment  of  a  receiver  of  the  lo- 
cal assets  of  a  foreign  corporation 
may  be  maintained  upon  its  insol- 
vency, when  it  has  officers,  creditors, 
and  property  within  the  state,  and 
has  made  an  assignment  therein,  and 
its  affairs  have  passed  into  the  hands 
of  a  receiver  appointed  within  the 
state  of  its  domicil.  Walter  v.  F. 
K.  McAlister  Co.  21  Misc.  747. 

57 


ounL    ^ 
aferj 


ii  im^ 

/|li^J 


§73 


RECEIVERSHIPS— SUPPLEMENT. 


An  order  appointing  a  receiver  of 
an  insolvent  corporation  may  be 
made  without  notice,  where  tlie  com- 
plainant is  unable  to  get  service  of 
notice  on  the  officers  of  such  corpora- 
tion. Lindgren-Mahan  Chemical 
Fire  Engine  Co.  v.  Revere  Rtibber 
Co.  70  111.  App.  379. 

After  jurisdiction  obtained 
against  a  foreign  corporation  by  its 
appearance  and  judgment  a  receiver 
may  be  appointed.  De  Bemer  v. 
Drew,  57  Barb.  438. 

The  appointment  in  a  foreign 
state  will  not  defeat  rights  of  at- 
taching creditor  of  the  state  where 
the  property  is  situated,  or  credit- 
ors of  otlier  states.  John  Ray  Clark 
Co.  v.  Tobi/  Valley  Supply  Co.  3  Pa. 
Dist.  R.  518. 

The  appointment  of  a  foreign  re- 
ceiver will  not  be  made  where  it  will 
be  against  the  interest  of  citizens  of 
the  state.  Borton  v.  Brines-Chase 
Co.   175  Pa.   209. 

A  nonresident  stockholder  of  a  for- 
eign corporation  may  maintain  an 
action  for  the  appointment  of  a  re- 
ceiver of  its  property  within  the 
state,  although  its  affairs  are  in  the 
hands  of  a  receiver  appointed  by  the 
courts  of  its  domicil,  since  the  plain- 
tiff does  not  sue  as  a  representative 
of  the  corporation.  Walter  v.  F.  E. 
McAlister  Co.  21  Misc.  747. 

Jurisdiction. 

Where  the  rights  of  domestic 
creditors  are  not  involved  the  courts 
will  remit  the  assets  to  a  foreign  re- 
ceiver for  distribution  in  Pennsylva- 
nia. Kean  v.  Supreme  Sitting,  0.  of 
I.  H.  3  Pa.  Dist.  323. 

The  courts  of  Massachusetts  will 
not  protect  against  an  assignment  of 
credits  to  a  foreign  receiver  of  a  for- 
eign corporation,  an  attachment  of 
credits  made  by  a  nonresident  cred- 
itor after  the  assignment.  Witters 
V.  Globe  Sav.  Bank,  171  Mass.  425. 

A  foreign  receiver  who  has  ob- 
tained possession  of  property  within 
the  jurisdiction  of  the  court  appoint- 
ing him  will  be  protected  in  such  pos- 
session in  any  jurisdiction  into 
which  he  may  take  the  property. 
Robertson  v.  Stead,  135  Mo.  135,  33 
L.  R.  A.  203. 

A  receiver  in  Xew  Jersey  of  a  for- 

58 


eign  corporation  for  which  a  receiver 
has  been  appointed  in  the  state  of  its 
domicil  is  amenable  only  to  the  di- 
rection of  the  courts  of  New  Jersey, 
and  not  to  the  direction  of  the  domi- 
ciliary receiver.  Irwin  v.  Granite 
State  Provident  Asso.  56  N.  J.  Eq. 
244. 

Foreign  statutory  trustees  dis- 
cussed.    Re  Waite,  99  N.  Y.  433. 

Suits  by  and  against. 

A  receiver  appointed  by  a  chan- 
cery court  in  one  state  of  the  prop- 
erty, business,  and  assets  of  a  build- 
ing and  loan  association,  under  a  de- 
cree adjudging  the  corporation  in- 
solvent, and  directing  the  winding 
up  of  its  affairs,  and  directing  him 
to  bring  any  and  all  suits  necessary 
for  tiie  collection  of  its  assets  that 
they  may  be  distributed  inpayment  of 
its  debts  and  among  its  shareholders, 
may  sue  in  a  Federal  court  in  anoth- 
er state  upon  a  note  and  mortgage 
given  by  a  shareholder,  where  all  the 
debts  have  been  paid.  Rogers  v. 
Riley,  80  Fed.  Rep.  759.  Citing 
Hard  v.  Elizabeth,  41  N.  J.  L.  1; 
Metzner  v.  Bauer,  98  Ind.  427. 

The  principles  of  comity  do  not  ap- 
ply to  an  action  by  a  foreign  receiver 
of  a  foreign  mutual  insurance  com- 
pany acting  under  a  decree  in  the 
foreign  jurisdiction  making  an  as- 
sessment on  premium  notes,  even  if 
otherwise  applicable,  where  the  notes 
were  taken  for  insurance  on  property 
in  the  state  while  the  company  was 
doing  business  within  the  state  in 
violation  of  McClain's  (Iowa)  Code, 
§  1144,  prohibiting  foreign  insurance 
companies  from  doing  business  with- 
out compliance  with  the  conditions 
therein  mentioned.  Parker  v.  Lamb 
d  Sons,  99  Iowa,  265,  34  L.  R.  A. 
704. 

A  receiver  of  a  foreign  nation  can- 
not sue  in  Texas.  Moreau  v.  Du  Bel- 
let  (Tex.  Civ.  App.)  27  S.  W.  503. 

The  commencement  of  an  action 
by  a  foreign  receiver  in  Texas,  where 
such  receivers  are  not  entitled  to  sue, 
does  not  suspend  the  running  of  the 
statute  of  limitations.  Kellogg  v. 
Lewis,  16  Tex.  Civ.  App.  668. 

A  receiver  of  a  foreign  corporation 
properly  appointed  in  the  state 
where  such  corporation  is  domiciled 


SUITS  BY  RECEIVERS— DEFENSES  TO. 


§  77 


may  maintain  an  action  in  New  York 
as  a  matter  of  comity  and  interstate 
curtesy  to  obtain  possession  of  the 
property  of  such  corporation  within 
the  latter  state.  Mabon  v.  Ongley 
Electric  Co.  24  App.  Div.  50. 

A  receiver  appointed  in  a  foreign 
state  may  maintain  a  suit  in  the 
courts  of  the  state  of  Missouri  con- 
cerning the  property  of  his  estate  as 
against  all  foreign  creditors,  without 
regard  to  whether  they  have  a  com- 
mon domicil  with  him.  Weil  v.  Bank 
of  Burr  Oak,  76  Mo.  App.  34. 

A  receiver  of  a  foreign  corpora- 
tion, appointed  in  the  state  of  its 
domicil,  may  institute  in  the  courts 
of  West  Virginia  suits  in  his  own  or 
the  corporate  name,  for  debts  or 
claims  due  the  corporation.  Swing 
V.  Bentley  &  G.  Furniture  Co.  (W. 
Va.)  31  S.  E.  925;  Swing  v.  Park- 
ersburg  Veneer  &  Panel  Co.  (W.  Va.) 
31  S.  E.  926. 

The  receiver  of  a  foreign  corpora- 
tion, appointed  and  residing  in  the 
state  of  its  domicil,  cannot  maintain 
an  action  against  the  corporation  for 
the  sole  purpose  of  having  an  ancil- 
lary receiver  appointed  in  New  York, 
in  which  state  the  corporation  has 
property.  Mabon  v.  Ongley  Electric 
Co.  156  N.  Y.  196,  Reversing  24  App. 
Div.  41. 

The  receiver  of  a  foreign  corpora- 
tion appointed  by  a  foreign  jurisdic- 
tion will  not  be  permitted  to  bring 
suit  in  the  Missouri  courts,  where 
this  will  operate  to  permit  the  re- 
ceiver to  take  property  out  of  the 
state  to  the  injury  of  domestic  cred- 
itors. Waters-Pierce  Oil  Co.  v. 
American  Exch.  Bank,  71  Mo.  App. 
653. 

The  receivers  of  a  foreign  railroad 


corporation  may  be  served  with  proc- 
ess in  an  action  for  damages  accru- 
ing in  the  operation  of  the  road  by 
them,  in  the  same  manner  as  the  cor- 
poration might  have  been  served  be- 
fore their  appointment.  Hill  v.  Bal- 
timore &  0.  R.  Co.  7  Pa.  Dist.  R.  473. 

The  fact  that  a  foreign  corporation 
is  in  the  hands  of  a  receiver  is  not 
sufficient  cause  for  quashing  attach- 
ment proceedings  against  it.  Vogt 
V.  Covenant  Bldq.  &  L.  Asso.  21  Pa. 
Co.  Ct.  351. 

The  insolvency  of  a  foreign  corpo- 
ration, the  affairs  of  which  are  in  the 
hands  of  a  receiver  appointed  in  its 
domicil,  will  not  prevent  a  nonresi- 
dent stockholder  from  maintaining 
an  action  in  the  state  to  set  aside  an 
assignment  executed  by  the  corpora- 
tion therein  to  a  resident,  since  the 
corporate  officers  are  the  parties  im- 
plicated. Walter  v.  F.  E.  McAlister 
Co.  21  Misc.  747. 

A  foreign  receiver  may  be  substi- 
tuted in  a  pending  suit  on  terms  that 
will  protect  resident  creditors,  tia- 
tional  Trust  Co.  v.  Murphy,  30  N.  J. 
Eq.  408. 

A  foreign  receiver  has  a  special 
property  in  assets  delivered  into  his 
possession  in  the  jurisdiction  where 
he  was  appointed,  which  will  author- 
ize him  to  maintain  suit  for  their  re- 
covery even  against  the  claim  of  do- 
mestic creditors  who  attach  the 
property  after  he  has  brought  it  into 
the  United  States.  Robertson  v. 
Stead,  135  Mo.  135,  33  L.  R.  A.  203. 

A  foreign  receiver  may  sue  on  de- 
mand due  him,  when  domestic  cred- 
itors are  not  affected  by  it  or  the  do- 
mestic policy  involved.  Castleinan 
v.  Templeman,  87  Md.  546,  41  L.  R. 
A.  367. 


Page  173,  sec.  77. — Suits  against  stockholders  on  unpaid  subscrip- 
tions. 


A  depositor  may  enforce  by  action 
the  liability  of  a  stockholder  of  an 
insolvent  bank,  and  such  right  is  not 
reserved  to  the  receiver.  Millisock 
V.  Moore,  76  Mo.  App.  528. 

A  receiver  has  power  to  maintain 
suit  against  stockholders  for  unpaid 
subscriptions.  Wyman  v.  Willianis, 
52  Neb.  833. 


One  who  purchases  stock  in  a  bank 
cannot  avoid  his  liability  for  an  as- 
sessment by  a  receiver  of  the  bank, 
by  alleging  that  no  part  of  the  orig- 
inal capital  was  ever  paid  for  as  re- 
quired by  law.  Wallace  v.  Hood,  89 
Fed.  Rep.  11. 

The  individual  liability  for  debts 
of  the  corporation,  provided  by  Kan. 

59 


§  80 


RECEIVERSHIPS— SUPPLEMENT. 


Cron.  Stat,  tl  1192,  is  not  to  be  en- 
forced at  the  suit  of  a  receiver,  but 
by  the  individual  creditors.  Dexter 
V.  Edmaiuls,  89  Fed.  Rep.  467. 

A  receiver  may  mainUxin  an  action 
to  enforce  the  liability  of  stockhold- 
ers to  pay  calls  for  assessments 
made  by  him,  under  the  order  of  the 
court,  for  the  payment  of  the  debts 
of  tlie  corporation.  Gaincy  v.  Qil- 
son,  149  Ind.  58. 

The  procedure  prescribed  by  ilinn. 
Gen.  Stat.  1894,  chap.  70,  in  pro- 
ceodin<;s  by  creditors  to  enforce  the 
liability  of  stockholders  of  an  in- 
solvent bank,  governs  a  proceeding 
by  a  receiver  appointed  under  Minn. 
Gen.  Stat.  chap.  145,  §  20,  to  enforce 
such  liability,  and  an  order  of  the 
court  authorizing  the  institution  of 
such  a  proceeding  by  him  is  not  a 
necessary  preliminary.  Ueland  v. 
Eaugan,  70  Minn.  349. 

The  liability  of  stockholders  for 
the  debts  of  the  corporation,  imposed 
by  the  Kansas  laws,  is  not  an  asset 
of  the  corporation  which  may  be 
sued  for  by  a  receiver.  Brown  v. 
Trail,  89  Fed.  Rep.  641. 


The  liability  of  stockholders  of  an 
insolvent  bank  under  Iowa  Acts  18th 
Gen.  Assem.  chap.  208,  §  1,  making 
them  liable,  in  addition  to  the 
amount  of  stock  held  by  them,  to  an 
amount  equal  to  their  respective 
shares  for  all  liabilities  of  the  bank 
accruing  while  they  remained  such 
stockholders,  may  be  enforced  by  a 
receiver  of  the  bank, instead  of  by  the 
creditors,  appointed  to  collect  and 
distribute  such  fund.  State,  Stone, 
V.  Union  Slock  Yards  State  Bank, 
103  Iowa,  549,  citing  Story  v.  Fur- 
vian,  25  N.  Y.  214;  Wilson  v.  Book, 
13  Wash.  676. 

For  power  to  sue  stockholders,  see 
Van  Steenwyck  v.  Sackett,  17  Wis. 
646;  Elderkin  v.  Peterson,  8  Wash. 
674. 

A  creditor  of  a  limited  partnership 
association  of  which  a  receiver  has 
been  appointed  is  not  thereafter  en- 
titled to  issue  execution  on  his  judg- 
ment against  subscribers  to  stock  of 
the  association  whose  subscriptions 
are  not  paid  up.  Rouse  v.  Detroit 
Cycle  Co.  Ill  Mich.  251,  38  L.  R.  A. 
794. 


Page  179,  sec.  80. — Suits  in  distraint. 


Bennett  v.  Rolins,5  Car.  &  P.  379; 
Shelly  V.  Pelham,  1  Dick.  120;  Lucas 
V.  ilayne,  1  Hogan,  394;  Hughes  v. 
Hughes  1  Ves.  Jr.  161,  3  Bro.  Ch. 
Eden's  ed.  87  note;  Brandon  v. 
Brandon,  5  Madd.  473. 


For  suit  on  bond  taken  in  viola- 
tion of  order  of  court — see  O'Gor- 
man  v.  Sabin,  62  Minn.  46. 


Right  of  receivers  to  sue  generally. 


The  bank  comptroller,  and  not  the 
receiver,  is  the  proper  person  to 
bring  suit  under  Wis.  Rev.  Stat, 
chap.  71,  §  33.  Rusk  v.  Van  A'os- 
trand,  21  Wis.  161,  Overruling  Van 
Steenwyck  v.  Sackett,  17  Wis.  646. 

A  receiver's  right  cannot  be  ques- 
tioned when  he  was  ordered  to  effect 
a  settlement  and  his  action  was  per- 
mitted by  the  court.  Metropolitan 
'Nat.  Bank  v.  Commercial  State  Bank, 
104  Iowa,  682. 

As  to  the  form  of  action  by  re- 
ceivers, the  proper  parties,  and  the 
liability  of  stockholders  in  an  in- 
solvent insurance  company — see  Os- 
good V.  Lay  tin,  3  Keyes,  521. 

Under  the  English  practice  it  was 
proper  to  refer  the  question  of  suit 
60 


by  the  receiver  to  a  master  for  de- 
termination. Sturgeon  v.  Douglas, 
1  Hogan,  400. 

A  tenant  served  with  order  to  pay 
rent  to  a  receiver  can  pay  to  no  one 
else.  Russell  v.  Baker,  1  Hogan, 
180. 

The  right  of  the  receiver  to  sue, 
as  a  general  rule,  is  limited  by  the 
right  existing  in  the  debtor.  Smith 
V.  Woodruif,  1  Hilt.  462. 

And  when  his  right  to  sue  is  ques- 
tioned he  may  sue  and  defend  in  the 
name  of  the  debtor.  Smith  v.  United 
States  Exp.  Co.  135  111.  279. 

He  cannot  require  an  accounting 
of  the  debtor  as  an  executor.  Wor- 
rail  v.  Driggs,  1  Redf.  449. 


SUITS  BY  RECEIVERS— DEFENSES  TO. 


80 


And  cannot  maintain  an  action  to 
recover  the  value  of  property  sold  by 
a  bankrupt.  Lansing  v.  Manton,  14 
Xat.  Bankr.  Reg.   127. 

And  as  receiver  of  a  partnership 
cannot  recover  money  due  one  part- 
ner and  a  third  person.  Wheat  v. 
Bank  of  California,  119  Cal.  4. 

And  cannot  maintain  an  action  to 
recover  the  value  of  property  alleged 
to  have  been  transferred  by  an  in- 
solvent in  violation  of  an  insolvency 
act.  Tihbets  v.  Cohn,  IIU  Cal.  365. 
Citing  Lansing  v.  Manton,  14  Nat. 
Bankr.  Reg.  127 ;  Sutherland  v.  Da- 
vis, 10  Nat.  Bankr.  Reg.  424;  Re 
Steadman,  8  Nat.  Bankr.  Reg.  319. 

And  a  bill  by  a  receiver  against 
himself  as  a  stockholder  will  not  be 
sustained.  Wiswell  v.  Starr,  48  Me. 
401. 

And  where  the  receiver  has  already 
prosecuted  a  suit  the  plaintiff  for 
whose  benefit  the  suit  was  brought 
by  the  receiver  cannot  sue.  Tinkham 
V.  Borst,  24  How.  Pr.  246. 

It  has  been  held  that  except  where 
the  legal  title  has  been  transferred 
to  him  the  receiver  cannot  sue  in  his 
own  name.  Wisener  v.  Myers,  3  Pa. 
Dist.  R.  687. 

An  attachment  against  a  tenant, 
and  distress,  cannot  both  be  prose- 
cuted by  the  receiver  at  the  same 
time.  Nugent  v.  Nugent,  1  Hogan, 
169. 

A  debt  due  the  sheriff  cannot  be 
recovered  by  the  receiver  against 
him  individually.  Norcross  v.  Hoi- 
lingsworth,  83  Hun,  127. 

A  receiver  may  be  appointed  to 
conduct  a  litigation  at  law  specially, 
if  it  appears  that  the  interest  of  cred- 
itors will  be  better  protected  than  by 
allowing  receivers  of  the  estate  to  do 
so.  Vandergrift  v.  Interstate  S.  B. 
Co.  43  W.  N.  C.  247. 

On  application  it  is  proper  to  au- 
thorize a  receiver  to  employ  counsel 
to  advise  him  as  to  his  defense;  but 
the  opinion  of  such  counsel  is  not 
conclusive.  Troy  Sav.  Bank  v.  Mor- 
rison, 27  App.  Div.  423. 

And  he  may  be  directed  to  discon- 
tinue a  suit.  Merritt  v.  Lyon,  16 
Wend.  421. 

As  a  condition  to  a  recovery  of  se- 
curities illegally  exchanged  by  a  cor- 
poration over  which  he  is  appointed, 


the  receiver  is  only  required  to  ten- 
der back  such  securities  as  have 
come  to  his  hands  as  receiver.  Hayne 
v.  Metropolitan  Trust  Co.  67  Minn. 
245. 

But  the  receiver  is  not  required 
to  put  the  other  party  in  statu  quo, 
or  return  the  money  received,  where 
he  sues  to  set  aside  a  mortgage  as  in 
contravention  of  insolvent  laws. 
Moore  v.  American  Loan  &  T.  Co.  SO 
Fed.  Rep.  49. 

The  right  to  sue  is  dependent  on 
the  receiver  having  given  bond  if  re- 
quired by  the  order.  Seymour  v. 
Neicman,  77  Mo.  App.  578. 

The  receiver  of  a  national  bank,  in 
order  to  sue  for  an  ordinary  debt, 
will  not  be  required  to  get  an  order 
from  the  comptroller  of  the  cur- 
rency. National  Bank  of  the  Me- 
tropolis V.  Kennedy,  17  Wall.  19,  21 
L.  ed.  554. 

Where  a  receiver  has  been  ap- 
pointed under  the  national  currency 
act,  the  bank  still  continuing  to 
exist,  suit  is  properly  instituted 
against  it,  and  the  defense  is  made 
by  it.  Security  Bank  v.  National 
Bank  of  the  Commontcealth,  2  Hun, 
287 ;  cf.  Bank  of  Bethel  v.  Pahqui- 
oque  Bank,  14  Wall.  383,  20  L.  ed. 
840. 

Nonresident  receivers  of  national 
banlvs  are  required  to  give  security 
for  costs  under  U.  S.  Rev.  Stat.  § 
1001.  Piatt  V.  Adriance,  90  Fed, 
Rep.  772. 

He  may  bring  a  suit  in  equity  to 
set  aside  a  prior  voluntary  assign- 
ment and  to  remove  the  assignee, 
Morgan  v.  South  Milwaukee  Lake 
View  Co.  100  Wis.  405. 

And  to  enforce  the  common-law  li- 
ability of  stockholders,  to  the  same 
extent  as  the  corporation.  Oainey 
V.  Gilson,  149  Ind.  58. 

And  to  collect  a  note  given  for 
stock  liability.  Hepburn  v.  Kincan- 
non,  74  Miss.  691. 

The  receiver  of  an  insolvent  in- 
dorser  on  a  note  may  sue  the  orig- 
inal obligor  and  recover  a  dividend 
paid  to  the  holder  thereof.  Mercan- 
tile Nat.  Bank  v.  Macfarlane,  71 
Minn.  497. 

And  on  a  note  payable  to  a  bank  of 
which  he  is  receiver  he  may  sue  in 
his  own  name  as  receiver,  or  in  the 

61 


81 


RECEIVERSHIPS— SUPPLEMENT. 


name  of  the  bank.  Chicago  Fire 
Proofing  Co.  v.  Parle  Nat.  Bank,  145 
111.  481;  National  Bank  of  the  Mc- 
t}-opolis  V.  Kennedy,  17  Wall.  19,  21 
L.  ed.  554. 

And  to  recover  money  collected  on 
a  judgment  confessed  by  a  corpora- 
tion with  the  view  of  giving  a  pref- 
erence. Xcalis  V.  American  Tube  d 
Iron  Co.  150  N.  Y.  42. 

And  to  redeem  demised  premises 
taken  for  nonpayment  of  rent.  Bieti 
V.  Bixhy  (Sup.  Ct.  xVpp.  Term)  18 
Misc.  415;  Fitzpatrick  v.  Eyre,  1  Ho- 
gan,  171. 

And  to  terminate  tenancies  on  no- 
tice. Doe,  Alarsack,  v.  Read,  12 
East,  58. 

And  may  assail  the  debtor's  fraud- 
ulent transactions.  Pender  v.  Mal- 
Ictt,  122  N.  C.  1G3;  Chamberlain  v. 
O'Brien,  40  Minn.  80. 

The  receiver  in  supplementary  pro- 
ceedings may  bring  suit  for  conver- 
sion against  a  mortgagee  who  took 
possession  under  a  void  mortgage. 
Stephens  v.  Meriden  Britannia  Co. 
13  App.  Div.  208. 

And  to  collect  an  assessment  levied 


by  the  board  of  directors.  Wijman 
v.  Williams,  53  Neb.  070. 

In  an  action  by  a  receiver  of  an 
insolvent  bank  to  recover  a  stock  as- 
sessment, a  claim  of  the  stockholder 
that  entitles  him  to  be  paid  in  full 
entitles  him  to  offset  the  amount. 
Welles  V.  atout,  38  Fed.  Rep.  807. 

A  receiver  may  defend  against  an 
attachment.  Paine  v.  Holliday,  08 
Miss.  208. 

But  he  should  not  bring  attach- 
ment where  he  knows  there  is  a  dis- 
pute about  the  tenure.  Prcad  v. 
Lewis,  2  Molloy,  309. 

He  may  bring  actions  to  determine 
conflicting  claims.  Orm.es  v.  Baker, 
17  N.  Y.  Week.  Dig.  104. 

A  receiver  has  power  prima  facie 
to  sue  to  set  aside  a  fraudulent  mort- 
gage under  2  Wash.  Code,  §  331. 
Titloio  V.  Cascade  Oatmeal  Co.  15 
Wash.  052. 

The  validity  of  an  assignment  for 
benefit  of  creditors  should  be  chal- 
lenged by  the  receiver  of  the  insol- 
vent corporation,  and  not  by  a  stock- 
holder. Mealier  v.  F.  E.  McAlister 
Co.  21  Misc.  747. 


Page  180,  sec.  81. — Defenses  to  actions  brought  by  receivers. 


A  defense  that  might  have  been 
made  against  the  defendant  may  be 
made  against  the  receiver.  Wardle 
v.  Hudson,  90  Mich.  432;  Moise  v. 
Chapman,  24  Ga.  249. 

And  so  as  to  set-off.  Van  Wagoner 
V.  Paterson  Gaslight  Co.  23  N.  J.  L. 
283. 

An  action  by  the  receiver  of  a  bank 
will,  in  the  absence  of  any  allegation 
of  the  insolvency  or  indebtedness  of 
the  bank,  be  treated  as  though  it  was 
brought  directly  by  the  bank,  as  un- 
der 2  Hill's  (Wash.)  Code,  §  320,  a 
receiver  may  be  appointed  for  other 
purposes  than  the  winding  up  of  an 
insolvent  concern.  Shuey  v.  Holmes, 
20  Wash.  13. 

The  defense  is  not  available  in  an 
action  on  a  note  by  the  receiver  of  a 
bank,  appointed  under  Neb.  Comp. 
Stat.  chap.  8,  §  34,  that  such  note 
was  executed  by  the  maker  to  enable 
one  indebted  to  the  corporation  in 
62 


excess  of  the  maximum  limit  to  in- 
dorse the  same  to  the  bank  in  place 
of  the  illegal  excess  of  his  indebted- 
ness, as  such  transaction  was  a  fraud 
on  creditors  and  depositors.  Har- 
rington v.  Connor,  51  Neb.  214. 

An  order  directing  a  receiver  in 
supplementary  proceedings  to  bring 
suit  on  a  specified  claim  in  favor  of 
the  judgment  debtor,  and  "holding 
the  same  subject  to  the  further  or- 
der" of  the  court,  is  not  objection- 
able on  the  ground  that  such  judg- 
ment debtor  is  entitled  to  a  home- 
stead in  such  claim.  Globe  Phos- 
phate Co.  V.  Pinson,  52  S.  C.  185. 

In  the  absence  of  mismanagement 
or  bad  faith  in  prosecuting  an  ac- 
tion, a  motion  for  security  for  costs 
will  not  be  sustained  against  a  re- 
ceiver. Kimberly  v.  Hteicart,  22 
How.  Pr.  281;  Kimberly  v.  Black- 
ford, 22  How.  Pr.  443.  See  Kim,ber- 
ly  V.  Goodrich,  22  How.  Pr.  424. 


SUITS  AGAINST  THE  RECEIVER.  §§  82.  83 

Page  182,  sec.  82. — Suits  against  receivers;  generally. 


Equitable  relief  is  obtained  in  the 
same  court  in  which  the  receiver  was 
appointed.  Not  so,  however,  as  to 
legal  relief.  National  Bank  v.  Rich- 
mond Factory,  91  Ga.  284. 

When  the  receiver  exercises  the 
franchises  of  the  corporation  he  is 
subject  to  the  suit  as  the  company. 
Ball  V.  Malry,  91  Ga.  781. 

An  independent  action  cannot  be 
maintained  upon  a  pre-existing 
claim  due  from  an  insolvent  corpo- 
ration against  its  receiver,  appointed 
under  Minn.  Gen.  Stat.  1894,  §  5900, 
for  the  recovery  of  judgment  or  to 
have  the  claim  allowed  from  the 
trust  fund.  Bitffum  v.  Hale,  71 
Minn.  190. 

A  receiver  exercising  the  fran- 
chises of  a  corporation  subjects  him- 
self to  the  same  obligations  as  the 
corporation.  Hence  mandamus  will 
lie  to  compel  him  to  construct  a  street 
crossing.  Fo7-t  Dodge  v.  Minneapo- 
lis d  St.  I,.  R.  Co.  87  Iowa,  389. 

A  person  prejudiced  by  the  act  of 
a  receiver  should  apply  for  relief  in 
the  court  in  which  the  receiver  was 
appointed.  Searle  v.  Choat,  L.  R. 
25  Ch.  Div.  723. 

A  suit  brought  against  a  receiver 
both  individually  and  in  his  official 
capacity  cannot  be  sustained. 
Brandt  v.  Siedler,  10  Misc.  234. 


The  owner  of  commercial  paper  de- 
posited in  a  bank  under  circum- 
stances rendering  its  receipt  a  fraud 
may  be  relieved  from  an  election 
made  by  proving  the  claim  as  a  gen- 
eral creditor  in  ignorance  that  the 
better  remedy  of  pursuing  the  pro- 
ceeds in  the  hands  of  the  receiver  of 
the  bank  is  permitted  by  the  law, 
where  no  detriment  has  been  occa- 
sioned by  such  action  to  other  par- 
ties, which  will  create  an  estoppel. 
Standard  Oil  Co.  v.  Hawkins,  46  U. 
S.  App.  115,  74  Fed.  Rep.  395,  20  C, 
C.  A.  468,  33  L.  R.  A.  739. 

A  suit  will  lie  against  an  insolvent 
railroad  company  after  the  appoint- 
ment of  a  receiver,  for  the  killing  of 
an  animal  by  a  train,  as  the  title  to 
the  property  is  not  changed.  State 
V.  Port  Royal  &  A.  R.  Co.  84  Fed. 
Rep.  67. 

Service  on  a  station  agent,  being 
good  as  to  the  corporation,  is  good 
as  to  its  receiver.  Proctor  v.  Mis- 
souri, K.  &  T.  R.  Co.  42  Mo.  App. 
124. 

But  service  on  the  receiver  in  a 
petition  in  bankruptcy  is  not  suffi- 
cient. Re  Floicers,  65  L.  J.  Q.  B.  N. 
S.  679,  75  L.  T.  N.  S.  306. 


Page  183,  sec.  83. — Order  of  court  necessary. 


Unless  authorized  by  statute  the 
court  appointing  a  receiver  will  not 
permit  him  to  be  sued  without  leave. 
Reed  v.  Richmond  &  A.  R.  Co.  (Va.) 
4  S.  E.  587  ;  Piper  v.  Stratten  (Tex.) 
7  S.  W.  45 ;  De  Graffenried  v.  Bruns- 
wick &  A.  R.  Co.  57  Ga.  22;  Carrey 
V.  Spencer,  72  N.  Y.  S.  R.  108. 

A  suit  cannot  be  maintained  in 
the  Federal  court  against  a  receiver 
appointed  in  a  state  court,  without 
leave.  Rejall  v.  Greenhood,  60  Fed. 
Rep.  784. 

The  equitable  remedies  of  all  cred- 
itors should  be  asserted  in  the  case 
in  which  the  appointment  is  made. 
National  Bank  v.  Richmond  Factory, 
91  Ga.  284. 


The  resignation  of  a  receiver  does 
not  render  it  necessary  to  get  per- 
mission to  prosecute  against  his 
successor.  Fordyce  v.  Dixon,  70 
Tex.  694. 

An  answer  in  the  nature  of  a  cross 
action  against  a  receiver  is  only  by 
leave  of  court.  Kortjohn  v.  Seimers, 
29  Mo.  App.  271. 

The  method  for  the  ascertainment 
of  disputed  claims  against  a  dis- 
solved corporation,  prescribed  by  the 
New  York  statute  authorizing  pro- 
ceedings for  the  voluntary  dissolu- 
tion of  corporations,  is  not  exclusive, 
and  the  court  may  in  a  proper  case 
authorize  an  action  to  be  brought 
against  a  receiver  who  disputes  the 

6a 


83 


RECEIVERSHIPS— SUPPLEMENT. 


validity  of  a  claim.  Ludington  v. 
Thompson,  153  N.  Y.  499,  Allirraing 
4  App.  Div.  117. 

The  declaration  must  allege  that 
leave  to  sue  was  obtained.  St.  Louis, 
A.  tC-  S.  R.  Co.  V.  Hamilton,  158  111. 
366;  Keen  v.  Breckenridge,  96  Ind. 
69;  Mulcahcy  v.  Strauss,  151  111.  70. 

A  mere  allegation  in  the  complaint 
in  an  action  in  a  state  court  against 
the  receiver  of  a  railroad  company 
appointed  by  a  Federal  court,  that 
defendant  claims  some  title  to  the 
land  in  suit  for  which  plaintiff 
brings  an  action,  is  insuflicint  to 
give  the  court  jurisdiction  unless 
leave  to  sue  has  been  obtained,  un- 
der act  of  Congress  August  13,  1888, 
§  3.  Bennett  v.  Northern  P.  R.  Co. 
17  Wash.  534.  Citing  Barton  v. 
Barhour,  104  U.  S.  126,  26  L.  ed.  072; 
Davis  v.  Gray,  16  Wall.  203,  21  L.  ed. 
447 ;  Central  Trust  Co.  v.  East  Ten- 
nessee, V.  d  G.  R.  Co.  59  Fed.  Rep. 
523;  Mcyulta  v.  Lochridge,  141  U. 
S.  327,  35  L.  ed.  790;  Re  Tyler,  149 
U.  S.  164,  37  L.  ed.  689;  Eddy  v. 
Lafayette,  4  U.  S.  App.  247,  49  Fed. 
Rep.  807,  1  C.  C.  A.  441;  Swope  v. 
Villard,  61  Fed.  Rep.  417;  Comer  v. 
Felton,  61  Fed.  Rep.  731.  Distin- 
guishing Missouri  P.  R.  Co.  v.  Texas 
P.  R.  Co.  41  Fed.  Rep.  311.  Criticis- 
ing Broicn  v.  Rauch,  1  Wash.  497. 

An  attachment  suit  against  a  for- 
eign building  and  loan  association  is 
not  cut  off  by  the  fact  that  it  has 
gone  into  the  hands  of  a  receiver  in 
its  home  state.  Southern  B.  d  L. 
Asso.  V.  Price,  88  Md.  155,  42  L.  K.  A. 
206. 

The  appointment  of  a  receiver  for 
a  lessor  of  land,  to  collect  the  debts 
due  such  lessor,  will  not  prevent  a 
purchaser  of  the  premises  at  an  ex- 
ecution sale  against  such  lessor  from 
bringing  an  action  to  recover  rent 
due  under  the  lease.  Griffith  v.  Bur- 
lingame,  18  Wash.  429. 

Leave  to  sue  a  receiver  for  a  claim 
which  he  admits  will  not  be  granted, 
where  his  refusal  to  pay  at  the  time 
is  due  to  his  uncertainty  as  to 
whether  he  possesses  sufficient  as- 
sets to  pay  all  the  creditors  in  full. 
Re  Machicirth,  15  App.  Div.  65. 

The  appointment  of  a  receiver  will 
not  prevent  foreclosure  of  a  prior 
mortgage.  Real  Estate  Title  Ins.  & 
64 


T.  Co.  V.  Mahoning  Rolling  Mill  Co. 
G  Pa.  Dist.  R.  409. 

The  api)ointniont  of  a  receiver  of 
a  corporation  will  not  prevent  a  suit, 
judgment,  and  execution  where  he  is 
carrying  on  the  corporate  business. 
Ibid. 

An  action  to  establish  the  valid- 
ity of  a  claim  against  an  insolvent 
bank  may  be  brought  in  a  court  of 
competent  jurisdiction  again^^t  both 
the  insolvent  banlv  and  the  receiver, 
or  against  either,  and  if  against  the 
receiver  jointly  or  alone  he  may  be 
directed  by  the  judgment  to  recognize 
the  claim  and  provide  for  its  pay- 
ment with  the  other  claims  against 
the  bank,  and  if  against  the  bank 
alone  it  is  binding  upon  the  receiver. 
Denton  v.  Baker,  48  U.  b.  App.  235, 
79  Fed.  Rep.  189,  24  C.  C.  A.  476. 

An  action  at  law  may  be  main- 
tained against  a  receiver  of  a  na- 
tional bank  upon  a  judgment  ob- 
tained against  the  banlc  in  a  state 
court,  and  the  receiver  directed 
therein  to  recognize  the  claim  and 
provide  for  its  payment  with  other 
claims  against  the  bank,  as  man- 
damus will  not  lie  to  enforce  such 
claim.     Ibid. 

An  application  for  leave  to  levy 
an  execution  on  assets  of  a  firm  in 
the  hands  of  a  receiver  appointed  in 
an  action  for  an  accounting  after  the 
dissolution  of  the  firm  should  be 
granted,  even  if  the  firm  is  insolvent, 
where  the  receiver  was  appointed  with 
the  consent  of  both  parties  to  the 
action,  and  the  intention  was  not  to 
wind  up  the  affairs  of  the  firm  with 
the  greatest  possible  speed,  but  to 
continue  the  business  for  the  benefit 
of  the  parties,  resulting  in  the  hin- 
dering and  delaying  of  creditors  if 
the  assets  are  held  exempt  from  exe- 
cution. Schloss  V.  Schloss,  14  App. 
Div.  333. 

If  a  claim  is  properly  cognizable 
in  the  court  appointing  a  receiver, 
leave  should  not  be  given  to  sue  the 
receiver.     Re  ilerbst,  63  Hun,  247. 

Leave  will  not  be  granted  policy 
holders  in  an  insolvent  insurance 
company  to  sue  the  receiver  because 
their  policies  contain  a  clause  re- 
quiring suit  to  be  brought  within  a 
specified  period,  as  their  rights  are 
fixed   by  the  decree  of  dissolution. 


SUITS  AGAINST  THE  RECEIVER. 


§  84 


and  the  limitation  ceases  to  operate. 
Com.  V.  Niagara  Mut.  F.  Ins.  Co.  6 
Pa.  Dist.  666. 

A  suit  for  the  flooding  of  neigh- 
boring property  by  a  dam  and  pump 
cannot  be  maintained  against  a  re- 
ceiver who  has  merely  used  it  as  it 
came  into  his  hands  after  continu- 
ous use  by  the  company  and  various 
prior  receivers  as  necessary  to  the 
operation  of  the  property,  unless  the 
suit  is  limited  to  the  acts  of  the  lat- 
er receiver  alone.  Jones  v.  Schlap- 
iack,  81  Fed.  Rep.  274. 

An  agent  of  a  corporation  for  a 
specified  term  of  years  cannot  main- 
tain an  action  against  the  receiver 
of  such  corporation  on  its  being  de- 
clared insolvent  and  its  charter  for- 
feited, for  damages,  because  he  was 


not  continued  in  his  employment  as 
agent  after  the  receiver  was  ap- 
pointed. Rosenhaum  v.  United 
States  Credit  System  Co.  60  N.  J.  L. 
294.  Citing  Farroiv  v.  Wilson,  L. 
R.  4  C.  P.  744;  Spalding  v.  Rosa,  71 
N.  Y.  40,  27  Am.  Rep.  7;  People  v. 
Glohe  Mut.  L.  Ins.  Co.  64  How.  Pr. 
240 :  People  v.  Glohe  Mut.  L.  Ins.  Co. 
91  N.  Y.  174. 

A  motion  to  abate  an  action  com- 
menced against  the  receivers  of  a 
railroad  company  will  be  sustained 
where  more  than  a  year  has  elapsed 
since  the  death  of  the  original  re- 
ceivers and  the  appointment  of  a  re- 
ceiver de  bonis  nan,  without  any  at- 
tempt having  been  made  to  revive 
the  action  against  him.  Hutchings 
V.  Eddy,  6  Kan.  App.  490. 


Page  186,  sec.  84. — Exceptions  to  the  rule. 


By  acts  of  Congress  of  1887-88,  § 
3,  leave  to  sue  receivers  appointed 
by  Federal  courts  is  not  required, 
and  this  applies  to  any  court. 
Louisville  S.  R.  Co.  v.  Tucker,  20 
Ky.  L.  Rep.  1303. 

An  action  may  be  maintained 
without  leave  by  the  direction  of  the 
governor,  for  the  sole  purpose  of  de- 
termining the  question  of  title  to 
certain  lands  in  controversy  between 
the  state  and  a  designated  railway 
company  in  the  custody  of  a  re- 
ceiver appointed  by  a  Federal  court. 
Houston  &  T.  C.  R.  Co.  v.  State 
(Tex.  Civ.  App.)  39  S.  W.  390. 

But  such  a  receiver  cannot  with- 
out such  leave  be  sued  in  a  state 
court  in  an  action,  the  purpose  of 
which  is  to  take  from  his  control 
property  belonging  to  the  corpora- 
tion or  held  by  it  under  a  claim  of 
ownership  when  tlie  receiver  took 
possession.  Hollificld  v.  Wrights- 
ville  &  T.  R.  Co.  99  Ga.  365;  Meyer 
V.  Harris,  61  N.  J.  L.  83. 

And  this  act  applies  to  actions  for 
negligence  of  the  receiver,  his  em- 
ployees, and  agents.  Hill  v.  Balti- 
more &  0.  R.  Co.  7  Pa.  Dist.  R.  473. 

The  power  of  the  court  to  protect 
its  receiver  is  not  limited  by  the 
above  act.  Statcler  v.  California 
Nat.  Bank,  77  Fed.  Rep.  43. 


The  act  applies  to  a  territorial  re- 
ceiver. Wheeler  v.  Smith,  81  Fed. 
Rep.  319. 

The  act  does  not  apply  when  the 
purpose  of  the  suit  is  to  establish 
title  to  personal  property  placed  and 
then  in  the  receiver's  possession. 
J.  I.  Case  Ploio  Works  v.  Finks,  52 
U.  S.  App.  253,  81  Fed.  Rep.  529,  26 
C.  C.  A.  46;  Trumbull  v.  Makeever, 
9  Colo.  App.  350;  Dillingham  v.  An- 
thony, 73  Tex.  47,  3  L.  R.  A.  634; 
Fordyce  v.  Withers,  1  Tex.  Civ.  App. 
540. 

The  leave  to  sue  generally  required 
may  be  waived  by  the  entry  of  ap- 
pearance without  objections.  Flen- 
tham  v.  Steward,  45  Neb.  640;  Mul- 
cahey  v.  Strauss,  151  111.  70;  Elkhart 
Car  Works  Co.  v.  Ellis,  113  Ind.  215; 
Ohio  d  M.  R.  Co.  V.  Nickless,  71  Ind. 
271;  Hubbell  v.  Curran,  9  How.  Pr. 
424. 

Neither  an  original  assignee  nor 
his  successor  is  a  receiver  so  as  to 
require  leave  of  court  before  bring- 
ing suit  against  him,  in  view  of 
Mont.  Code  Civ.  Proc.  §§  4510-4535, 
regulating  common-law  assignments 
for  the  benefit  of  creditors,  and  §§ 
950-95G,  relating  to  receivers.  Bab- 
cock  V.  .Maxwell,  21  Mont.  507. 

Leave  of  the  court  appointing  a 
foreign  receiver  is  not  necessary  in 

65 


§  S4 


RECEIVERSHIPS— SUPPLEMENT. 


garnishment  proceedings  against 
him.  Phelan  v.  Oanebin,  5  Colo. 
14. 

Suit  may  be  brought  to  foreclose 
a  mortgage,  against  receivers,  with- 
out leave  of  court.  American  Loan 
d  T.  Co.  V.  Central  Vermont  R.  Co. 
84  Fed.  Rep.  917. 

Leave  of  court  is  not  required  in 
order  to  sue  the  corporation  over 
which  a  receiver  is  appointed.  Real 
Estate  Title  Ins.  &  T.  Co.  v.  Mahon- 
ing Rolling  Mill  Co.  6  Pa.  Dist.  409. 

The  cases  are  not  uniform,  but  the 
weight  of  authority  seems  to  be  that 
failure  to  obtain  leave  to  sue  is  not 
a  jurisdictional  fact.  Mulcahey  v. 
Strauss.  151  111.  70;  St.  Joseph  d 
D.  C.  R.  Co.  V.  Smith,  19  Kan.  225; 
Chautauqua  County  Bank  v.  Risley, 
19  N.  Y.  369,  75  Am.  Dec.  347 ;  Kin- 
ney V.  Crocker,  18  Wis.  75;  Lyman 
V.  Central  Vermont  R.  Co.  59  Vt. 
167;  Allen  v.  Central  R.  Co.  42 
Iowa,  683;  Tohias  v.  Tobias,  51 
Ohio  St.  519. 

It  is,  however,  in  the  Federal 
courts.  Flentham  v.  Steivard,  45 
Neb.  640;  Wisioall  v.  Sampson,  14 
How.  52,  14  L.  ed.  322;  Barton  v. 
Barbour,  104  U.  S.  126,  26  L.  ed. 
672. 

Right  of  substitution. 

The  court  may  permit  a  receiver 
to  be  substituted  in  a  pending  action. 

The  court  may  permit  the  plain- 
tiff in  an  action  commenced  against 
an  elevated-railroad  company  to  re- 
cover the  rental  and  fee  damages  to 
their  property,  to  proceed  with  the 
same  against  the  receiver  pendente 
lite  appointed  in  an  action  to  fore- 
close a  mortgage  given  by  the  com- 
pany, and  to  make  such  receiver  a 
defendant.  Re  Jacobson,  23  App. 
Div.  75. 

But  this  is  not  necessary  to  enable 
the  plaintiff  to  obtain  judgment. 
Knauer  v.  Globe  Mut.  Ins.  Co.  14 
Jones  &  S.  370. 

A  receiver  in  supplementary  pro- 
ceedings is  not  entitled  to  be  sub- 
stituted as  a  defendant  in  lieu  of 
the  judgment  debtor  in  an  action  by 
creditors.  Ross  v.  Wigg,  100  N.  Y. 
243. 

Garnishment. 


66 


A  receiver  is  subject  to  garnish- 


ment, where,  prior  to  the  service  of 
the  writ  upon  him,  the  court  had  or- 
dered him  to  turn  over  all  the  prop- 
erty to  the  owner.  Russell  v.  Mil- 
lett,  20  Wash.  212. 

As  a  general  rule  a  receiver  can- 
not be  garnished  without  leave  of 
court.  Citizens'  Commercial  &  Sai). 
Bank  v.  Bay  Circuit  Judge,  110 
Mich.  033;  People,  Tremper,  v. 
Brooks,  40  Mich.  333;  McGoican  v. 
Myers,  66  Iowa,  99. 

A  contract  completed  by  the  re- 
ceiver and  money  due  him  as  receiv- 
er are  not  subject  to  garnishment 
against  the  debtor.  Cooke  v. 
Orange,  48  Conn.  401. 

A  judgment  creditor  of  a  company 
to  which  a  receiver  appointed  by  the 
Federal  court  is  alleged  to  be  in- 
debted for  rent  cannot,  for  want  of 
privity  between  the  parties,  and 
without  leave  of  the  court  making 
such  appointment,  maintain  garn- 
ishment proceedings  in  a  state  court 
to  appropriate  the  amount  due  to 
the  payment  of  his  judgment,  since 
the  suit  does  not  refer  to  any  act  or 
transaction  of  the  receiver  concern- 
ing the  property  committed  to  his 
care  in  respect  to  which  he  is  lia- 
ble under  act  of  Congress  of  March 
3,  1887,  as  corrected  by  the  act  of 
August  13,  1888,  without  such  leave. 
Glover  v.  Thayer,  101  Ga.  824. 

But  it  has  been  held  that  a  for- 
eign receiver  may  be  garnished. 
Wilson  V.  Gifford,  12  Ohio  C.  C.  597. 

A  garnishment  summons  served  on 
one  in  his  individual  capacity  does 
not  bind  any  property  or  money 
held  by  him  as  a  receiver.  Fleming 
V.  Gillespie,  7  Okla.  430. 

In  an  attachment  execution  issued 
after  a  judgment  has  been  obtained 
against  the  defendant,  a  national 
bank  or  its  receiver  may  be  sum- 
moned as  garnishee;  and  such  at- 
tachment is  not  prohibited  by  U.  S. 
Rev.  Stat.  §  5242,  providing  that  no 
judgment  or  execution  shall  issue 
against  such  bank  or  its  property 
before  final  judgment.  Conway  v. 
Schall,  42  W.  N.  C.  328. 

Where  the  property  and  business 
of  a  corporation  are  in  the  hands  of 
a  receiver  he  is  the  person  to  serve 
in  garnishment  against  the  corpora- 


SUITS  AGAINST  THE  RECEIVEE. 


§§  88,  89 


tion.     Phelan   v.    Ganebin,    5    Colo. 
14. 

Indebtedness  due  by  receivers  ap- 
pointed in  a  Federal  court  may  be 
garnished  in  a  state  court,  but  no 
executory  process  can  be  issued  by 
the  court  against  such  receivers. 
The  payment  can  only  be  made  on 
application  to  the  court  appointing 
the  receiver.  Irwin  v.  McKechnie, 
58  Minn.  145,  26  L.  K  A.  218. 

Injunction. 

The  receiver,  being  an  officer  of 
court,    may    be    restrained.     Lehigh 


Coal  &  Nav.  Co.  v.  Central  R.  Co. 
42  N.  J.  Eq.  591. 

The  court  will  enjoin  a  receiver 
from  exercising  the  franchises  of  a 
corporation  granted  by  the  legisla- 
ture. Brooklyn  v.  Jourdan,  7  Abb. 
N.  C.  23. 

Receivers  of  a  railroad  company 
were  restrained  from  diverting 
freight  traffic  from  another  railway, 
in  view  of  a  similar  decision  in  an- 
other circuit  relating  to  the  same 
subject-matter.  Grand  Trunk  R. 
Co.  V.  Central  Vermont  R.  Co.  84 
Fed.  Rep.  06. 


Page  194,  sec.  88. — Eeceiver's  defenses. 


It  is  no  defense  to  an  action 
against  receivers,  that  they  had  re- 
linquished control,  where  they  do 
not  show  that  their  accounts  have 


been  acted  on  and  that  a  decree  dis- 
charging them  has  been  entered. 
Fordyce  v.  Clancy,  2  Tex.  Civ.  App. 
24. 


Page  195,  sec.  89. — Character  of  judgment  against  receiver. 


A  personal  judgment  will  not  be 
rendered  against  a  receiver.  Marsh 
V.  Hussey,  4  Bosw.  614. 

A  judgment  against  a  receiver  of 
a  railroad  company  for  damages  for 
breach  of  an  agreement  constituting 
the  consideration  for  a  portion  of  its 
right  of  way  may  direct  him  to  pay 
the  amount  thereof  out  of  any  funds 
in  his  hands,  and  provide  that,  if  it 
is  not  paid  and  the  court  appointing 
the  receiver  refuses  to  order  it  paid, 
the  receiver  having  money  subject 
to  the  payment  thereof,  an  order  of 
sale  shall  issue  thereon  as  in  other 
cases  of  the  foreclosure  of  vendors' 
liens.  Levy  v.  Tatum  (Tex.  Civ. 
App.)  43  S.  W.  941. 

The  court  rendering  a  judgment 
against  the  receiver  of  a  railroad 
company  for  damages  for  the  breach 
of  a  contract  of  the  company  to  main- 
tain a  station  at  a  certain  point  in 
consideration  of  land  for  its  right 
of  way  may  establish  the  same  as  a 
lien  upon  the  right  of  way  and  road- 
bed in  the  nature  of  a  vendor's  lien, 
where  the  receiver  has  taken  posses- 
sion of  the  line  and  is  operating  it. 
Ihid. 

Judgment  may  be  rendered  against 


a  receiver  until  he  is  finally  dis- 
charged. Houston  &  T.  C.  R.  Co. 
V.  Strycharski  (Tex.  Civ.  App.)  35 
S.  W.  851,  Affirmed  in  Part  and  Re- 
versed in  Part  in  37  S.  W.  415. 

A  judgment  in  a  state  court 
against  a  receiver  binds  only  such 
property  as  is  in  his  custody  in  the 
state  in  which  the  judgment  is  ren- 
dered. Reynolds  v.  Stockton,  140 
U.  S.  254,  35  L.  ed.  464. 

The  title  of  the  property  of  a  rail- 
road company,  not  being  in  the  re- 
ceiver, it  is  not  affected  by  judg- 
ment against  him.  Abbey  v.  Inter- 
national d  G.  N.  R.  Co.  5  Tex.  Civ. 
App.  261. 

Judgment  against  a  receiver  can- 
not be  carried  into  etYect  except  as 
directed  by  the  court.     Ibid. 

Where  a  suit  is  defended  by  a  re- 
ceiver in  the  name  of  the  bank  over 
which  he  is  receiver  he  is  barred  by 
the  judgment  of  the  court  as  if  he 
had  defended  in  his  own  name. 
Smith  V.  United  States  Exp.  Co.  135 
111.  279;  Bennitt  v.  Wilminqton 
Star  Min.  Co.  119  111.  9;  Chamber- 
lain V.  Preble,  11  Allen,  370;  Craig 
V.  Ward,  30  Barb.  377. 

67 


§  109  RECEIVERSHIPS— SUPPLEMENT. 

Page  199,  sec.  109. — Liability  of  receiver,  generally. 


The  receiver  is  not  liable  where 
goods  are  sold,  under  the  order  of 
court,  at  auction  at  a  loss.  Esk- 
ridge  v.  Rushworth,  3  Colo.  App. 
562. 

On  a  lease  where  there  is  no  adop- 
tion or  what  in  law  is  equivalent. 
Com.  V.  Franklin  Ins.  Co.  115  Mass. 
278. 

Or  for  services  after  delay 
amounting  to  laches.  Daniell  v. 
Last  Boston  Ferry  Co.  (Mass.)  31 
N.  E.  711. 

Or  for  neglect,  in  a  court  of  chan- 
cery.    Keene  v.  Gaehle,  56  Md.  343. 

Or  for  a  claim  filed  after  distribu- 
tion. Gaehle  v.  Snowden,  56  Md. 
343. 

Or  where  he  has  exercised  ordi- 
nary care.  Hamm  v.  J.  Stone  & 
Sons  Live  Stock  Co.  13  Tex.  Civ. 
App.  414. 

Or  on  a  judgment  rendered  after 
his  discharge.  Fordyce  v.  Du  Bose, 
87  Tex.  78. 

Or  on  a  lease  after  his  refusal  to 
accept,  if  he  does  so  in  a  reasonable 
time.  Nelson  v.  Kalkhoff,  60  Minn. 
305. 

Or  for  money  deposited,  if  he  exer- 
cises ordinary  care.  Barton  v.  Ridge- 
way,  92  Va.  163. 

Or  for  tax  against  stockholders. 
People  V.  Wall  Street  Bank,  39  Hun, 
525. 

Or  when  he  uses  his  best  judg- 
ment. Hynes  v.  McDermott,  14 
Daly,  104. 

Or  on  his  contract  as  receiver. 
Vanderlilt  v.  Central  R.  Co.  43  N. 
J.  Eq.  669. 

Nor  is  he  liable  on  the  uncom- 
pleted contracts  of  the  person  or  cor- 
poration over  whom  he  is  receiver. 
Casey  v.  'Northern  P.  R.  Co.  15 
Wash.  450;  Central  Trust  Co.  v. 
East  Tennessee  Land  Co.  79  Fed. 
Rep.  19. 

A  receiver  of  a  corporation  is  not 
bound  to  assume  its  contracts,  exe- 
cute them  so  far  as  they  remain  un- 
executed, and  discharge  all  liabili- 
ties which  have  accrued  under  them, 
merely  because  such  company  ap- 
pears to  be  solvent.  Empire  Dis- 
tilling Co.  V.  McNulta,  46  U.  S.  App. 

68 


578,  77  Fed.  Rep.  700,  23  C.  C,  A. 
415. 

Or  to  immediately  pay  a  judg- 
ment. Lesser  v.  Lesser,  45  N.  Y. 
Supp.  211. 

Or  for  material  and  repairs  or- 
dered by  a  lessee.  Estabrook  v. 
Stevenson,  50  Neb.  378. 

Or  upon  the  guaranty  of  sales  of 
coal.  Dauhe  v.  Philadelphia  &  R. 
Coal  &  L  Co.  40  U.  S.  App.  591,  77 
Fed.  Rep.  713,  23  C.  C.  A.  420. 

Or  for  interest  on  money  due  for 
supplies  sold,  which  the  purchaser 
should  pay.  Southern  R.  Co.  v. 
Carnegie  Steel  Co.  42  U.  S.  App. 
145,  76  Fed.  Rep.  492,  22  C.  C.  A. 
289. 

Or  for  injury  on  a  branch  road 
prior  to  appointment.  Dillon  v. 
Oregon  Short  Line  &  U.  N.  R.  Co. 
75  Fed.  Rep.  949. 

Or  for  a  settlement  of  a  trust 
fund  where  he  has  acted  in  good 
faith,  in  the  absence  of  fraud.  Neel 
V.  Carson,  18  Ky.  L.  Rep.  691. 

Or  on  a  contract  to  furnish  a  city 
with  light,  where  there  would  be  a 
loss.  General  Electric  Co.  v.  Whit- 
ney, 41  U.  S.  App.  165,  74  Fed.  Rep. 
664,  20  C.  C.  A.  674. 

Or  under  special  statutes  fixing 
the  liabilities  of  railroad  companies. 
Robinson  v.  Huidekoper,  98  Ga.  306. 

Or  for  personal  injury  growing 
out  of  the  negligence  of  a  coemployee, 
though  the  company  applied  for  a 
receiver.  Brown  v.  Comer,  97  Ga. 
801. 

Or  for  the  lease  of  land  by  a  rail- 
road company  where  an  order 
amounting  to  a  stipulation  has  been 
entered  into  with  the  lessor.  Thomas 
V.  Cincinnati,  N.  0.  &  T.  P.  R.  Co. 
77  Fed.  Rep.  667. 

Or  for  uncompleted  contracts. 
Vanderbilt  v.  Cetitral  R.  Co.  43  N.  J. 
Eq.  669. 

And  he  is  not  subject  to  penalties. 
Bonner  v.  Franklin  Co-Operative 
Asso.  4  Tex.  Civ.  Rep.  166;  United 
States  v.  Harris,  78  Fed.  Rep.  290; 
United  States  v.  Harris,  57  U.  S. 
App.  259,  85  Fed.  Rep.  533,  29  C.  C. 
A.  327. 

Or    on  a  lease  by  reason  of  his 


LIABILITY  OF  RECEIVER. 


109 


possession  of  the  premises.  Farm- 
ers  Loan  d  T.  Co.  v.  Northern  P. 
R.  Co.  58  Fed.  Rep.  257  j  Central 
Trust  Co.  V.  Wahash,  St.  L.  &  P.  R. 
Co.  34  Fed.  Rep.  259. 

Or  for  goods  consigned  when  the 
funds  cannot  be  followed  into  any 
property  or  money  in  the  hands  of 
the  receiver.  Henika  v.  Heinemann^ 
90  Wis.  478. 

Or  for  costs.  St.  John  v.  Denison, 
9  How.  Pr.  343;  But  see  Cook  v. 
Sharman,  8  Ir.  Eq.  Rep.  515. 

Or  for  conversion  of  property 
taken  and  sold  under  orders  of  court. 
Tapscott  V.  Lyon,  103  Gal.  297. 

Nor  is  he  personally  liable,  when 
the  sale  is  by  joint  receivers  to  a  per- 
son witli  whom  one  of  the  receivers 
had  an  agreement  to  become  a  part- 
ner and  afterwards  did  become  a 
partner,  in  the  absence  of  bad  faith, 
for  the  difference  between  the  actual 
value  and  the  price  for  which  it  was 
sold.  Wagner  v.  Swifts  Iron  d  S. 
Works,  16  Ky.  L.  Rep.  273. 

Or  to  pay  the  rent  under  a  lease 
where  it  does  not  appear  that  there 
are  sufficient  funds  to  pay.  Empire 
Distilling  Co.  v.  McNulta,  46  U.  S. 
App.  578,  77  Fed.  Rep.  700,  23  C.  C. 
A.  415. 

Or  for  rent  for  full  term  of  prem- 
ises taken  possession  of  under  orders 
of  court.  De  Wolf  v.  Royal  Trust 
Co.  72  111.  App.  411,  Reversed  in  173 
111.  435. 

Nor  is  he  bound  to  adopt  the  con- 
tracts of  a  car  trust  by  reason  of 
possession  taken.  Central  Car 
Trust  Co.  V.  Harris,  55  U.  S.  App. 
452,  84  Fed.  Rep.  535,  28  C.  C.  A. 
488. 

A  receiver  is  not  liable  for  eon- 
tempt  in  violating  the  orders  of  an- 
other court.  Aticood  v.  State,  59 
Kan.  728. 

Or  for  loss  of  stock  on  the  range 
and  buildings  uninsure"d.  Harrnn  v. 
./.  Stone  &  Sons  Live  Stock  Co.  13 
Tex.  Civ.  App.  414. 

Receivers  of  a  railroad  company 
are  not  liable  for  taxes  accruing 
during  a  time  in  which  such  compa- 
ny was  in  possession  of  and  enjoyed 
the  revenues  of  another  road  upon 
which  such  taxes  constituted  a  prior 
lien,  where  their  connection  with 
such  other  road  has  been  severed  by 


the  appointment  of  a  separate  re- 
ceiver in  an  entirely  distinct  suit, 
unless  they  have  assets  of  such  other 
road,  or  have  diverted  its  revenues 
to  the  improvement  or  betterment  of 
the  road  held  by  them,  or  to  the  pay- 
ment of  the  bonds  secured  thereon, 
as  their  liability  for  such  taxes  can 
only  be  as  an  obligation  carrying  a 
first  lien  upon  the  property  upon 
which  it  is  chargeable.  Comer  v. 
Polk  County,  52    U.    S.    App.    399, 

81  Fed.  Rep.  921,  27  C.  C.  A.  1. 
Nor   are  receivers   criminally  lia- 
ble under  the  Interstate  Conunerce 
Act.     United  States  v.  De  Coursey, 

82  Fed.  Rep.  302. 

A  chattel  mortgagee  who  permits 
the  mortgaged  property  to  go  into 
the  venture  of  a  continuance  of  the 
business  by  the  receiver  of  the  mort- 
gagor must  bear  the  loss,  where  the 
property  is  consumed  by  the  liabili- 
ties of  such  venture.  Sturimld  v. 
George  Vehr  Parlor  Frame  Co.  5 
Ohio  N.  P.  37. 

A  receiver  who  unlawfully  appro- 
priates money  which  comes  into  his 
hands  as  receiver,  or  fails  to  account 
for  and  pay  over  the  same  on  de- 
mand, is  not  within  Kan.  Comp. 
Laws  1889,  If  2220,  providing  that  if 
any  "agent"  shall  neglect  or  refuse 
to  deliver  to  his  "employer  or  em- 
ployers," on  demand,  any  money 
which  has  come  into  his  possession 
by  virtue  of  such  employment,  he 
shall  on  conviction  be  punished. 
State  V.  Huhbard,  58  Kan.  797,  39  L. 
R.  A.  860. 

A  receiver  is  not  liable  for  a  tort 
committed  by  the  company  before 
his  appointment.  Northern  P.  R. 
Co.  V.  Heflin,  48  U.  S.  App.  562,  83 
Fed.  Rep.  93,  27  C.  C.  A.  460. 

The  court  does  not  so  decide,  but 
thinks  the  receiver  should  not  be  lia- 
ble for  money  in  failing  banlc,  any 
more  than  if  robbed  of  it.  Lady 
Shaftesbury's  Case,  Prec.  in  Ch.  558, 
2  p]q.  Cas.  Abr.  691. 

A  receiver  was  held  not  liable  to 
judgment  creditor  for  losses  on  his 
judgment  caused  by  expenses,  in  Sec- 
ond Ward  Sav.  Bank  v.  Henes,  100 
Wis.  480. 

The  expenses  of  a  receivership 
growing  out  of  a  contest  over  a  fund 
may   be  avoided   by   depositing   the 

69 


§  110 


RECEIVERSHIPS— SUPPLEMENT. 


fund  in  court.  Continental  Nat. 
Bank  v.  Mycrle,  24  App.  Div.  154. 

Expenses  of  an  expert  accountant 
will  be  ordered  paid  by  the  receiver, 
where  a  large  sum  was  realized  to 
the  receivership  fund  thereby.  Sands 
V.  E.  S.  areelcy  d  Co.  83  Fed.  Rep. 
772. 

The  income  of  funds  in  the  hands 
of  a  receiver  is  not  liable  for  fees  of 
a  special  commissioner  for  selling 
property  under  a  foreclosure,  in  a 
contest  between  mortgagees  and  gen- 
eral creditors.  Randolph  v.  Fann- 
er's Loan  d  T.  Co.  91  Tex.  605,  Re- 
versing 41  S.  W.  113. 

The  term  "judicial  costs,"  to  which 
a  claim  for  taxes  upon  property  in 
the  custody  of  a  receiver  is  alone 
inferior,  does  not  include  the  cost  of 
keeping  and  taking  care  of  unpro- 
ductive property  for  over  three 
years  by  the  receiver, — especially 
where  it  does  not  appear  that  there 
is  not  sufficient  property  to  pay  both. 
Ledoiix  V.  La  Bee,  83  Fed.  Rep.  7G1, 

Where  the  receiver  acts  under  the 
authority  and  orders  of  court  of 
competent  jurisdiction  he  is  not 
personally  liable.  Remington  Paper 
Co.  V.  Watson,  49  La.  Ann.  1296. 

The  order  of  court  does  not  al- 
ways  relieve    the    receiver    as   such 


from  liability.  Levy  v.  Tatum 
(Tex.  Civ.  App.)   43  S.  W.  941. 

The  liability  of  the  receiver  of  an 
insolvent  national  bank  cannot  be 
adjudicated  in  an  action  brought  to 
revive  a  dormant  judgment  against 
the  bank,  to  which  he  is  made  a  par- 
tly. City  Nat.  Bank  v.  Swink  (Tex. 
Civ.  App.)  49  S.  W.  130. 

It  is  error  to  submit  the  question 
as  to  a  receiver's  liability  for  rents, 
upon  a  jury  trial  of  the  receiver's  ex- 
ceptions to  a  master's  report  upon 
an  accounting  by  him,  where  the 
master  found  that  he  was  not  liable 
for  rents,  and  neither  party  excepted 
to  the  report  in  that  respect.  Hamm 
V.  J.  Stone  d  Sons  Live  Stock  Co.  13 
Tex.  Civ.  App.  414. 

For  acts  within  the  line  of  his 
duty  the  receiver  is  only  liable  offi- 
cially, and  the  judgment  is  against 
him  officially  and  enforceable  out  of 
the  receivership  property.  Schmidt 
V.  Oayner,  59  Minn.  303. 

A  receiver  of  a  corporation  is  not 
relieved  from  liability,  either  person- 
ally or  upon  his  official  bond,  because 
of  the  disqualification  for  interest  of 
the  judge  who  appointed  him.  Unit- 
ed States  Nat.  Bank  v.  National 
Bank,  6  Okla.  1C3. 


Page  205,  sec.  110. — Must  obey  orders  of  court. 


A  receiver  will  be  compelled  to 
carry  out  a  judgment  directing  the 
reconveyance  of  land  to  a  specified 
party  provided  for  therein,  notwith- 
standing the  commencement  of  an 
action  by  other  parties  in  respect  to 
such  property,  in  the  absence  of  any 
proceedings  to  enjoin  the  carrying 
out  of  the  same.  Pierce  v.  Lees,  17 
App.  Div.  346. 

The  receiver  of  a  leasehold  must 
pay  from  subrents  the  head  rent, 
and  may  do  so  without  order  of 
court.  Balfe  v.  Blake,  1  Ir.  Ch.  Rep. 
365. 

A  railroad  company  which  be- 
comes the  agent  and  representative 
of  a  receiver  to  operate  a  line  of  rail- 
road, with  knowledge  of  the  interests 
of  a  car  trust  in  the  rolling  stock 
upon  such  line,  agreeing  to  pay  "all 
70 


the  expenses  of  said  operations," 
and  a  receiA'er  subsequently  ap- 
pointed of  such  company,  are  liable 
for  a  reasonable  compensation  for 
the  use  of  the  cars,  although  not  lia- 
ble for  unpaid  instalments  for  the 
purchase  price  of  the  cars.  Cen- 
tral Car  Trust  Co.  v.  Harris,  55  U. 
S.  App.  452,  84  Fed.  Rep.  535,  28  C. 
C.  A.  488. 

The  receiver,  being  an  officer  of 
court,  may  be  required  to  hand  over 
property  in  his  possession.  Smith 
v.  Dayton,  94  Iowa,  102. 

Lack  of  funds  in  the  hands  of  a  re- 
ceiver of  a  railroad  company  was 
held  to  be  no  defense  to  a  motion  to 
compel  him  to  perform  a  judgment 
requiring  the  railroad  company  to 
construct  a  crossing  over  plaintiff's 
premises,  where  a  copy  of  the  judg- 


LIABILITY  OF  RECEIVER. 


Ill 


ment  had  been  served  upon  him. 
An  order  directing  a  compliance  or 
surrender  of  the  premises  to  phiin- 
tiflf  was  proper.  Peckham  v.  Dutch- 
ess County  R.  Co.  145  N.  Y.  385. 

A  receiver  in  supplementary  pro- 
ceedings is  under  the  control  of  the 
court  rendering  the  judgment, 
though  he  was  appointed  by  the  coun- 
ty judge.  Pool  V.  Safford,  14  Hun, 
369. 

A  corporation  cannot  maintain  an 
action  at  law  upon  a  contract  made 
with  it  guaranteeing  payment  for 
coal  purchased  from  it,  for  the 
amount  of  coal  sold  by  receivers  of 
its  property,  if  sales  made  by  the 
receivers  are  within  the  guaranty, 
without  an  assignment  of  the  con- 


tracts of  sale  by  the  receivers,  or  dev- 
olution of  their  title  by  an  order 
of  the  court  discharging  them  and  re- 
storing the  property  to  the  company. 
Daube  v.  Philadelphia  d  R.  Coal  cC-  /. 
Co.  46  U.  S.  App.  591,  77  Fed.  Rep. 
713,  23  C.  C.  A.  420. 

In  the  case  of  a  receivership  of  a 
national  bank  the  filing  of  a  petition 
by  him  in  a  Federal  court  does  not 
operate  to  make  him  an  officer  of 
that  court,  or  to  place  the  assets  of 
the  bank  within  the  control  of  the 
court  in  the  sense  in  which  control 
is  acquired  where  a  receiver  is  ap- 
pointed by  the  court.  Ex  parte 
Chetwood,  165  U.  S.  443,  41  L.  ed. 
782. 


Page  206,  sec.  111. — Liability  for  use  of  property,  etc. 


A  receiver  is  liable  for  a  conver- 
sion of  property  in  the  possession  of 
the  firm  over  whose  property  he  was 
appointed.  Smith  v.  Hartog,  23 
Misc.  353. 

Where  a  receiver  operating  an  en- 
tire system  of  railroad  converts  the 
property  of  a  third  person,  and  uses 
it  to  improve  a  division  of  the  rail- 
road, the  fact  that  such  division  is 
subseqiiently  placed  in  the  hands 
of  another  receiver  will  not  relieve 
the  receiver  who  made  the  conver- 
sion, or  the  road  responsible  for  his 
acts,  from  liability  for  the  conver- 
sion. Central  of  Ga.  R.  Co.  v.  Hitch- 
cock, 91  Fed.  Rep.  209,  33  C.  C.  A. 
453. 

The  receiver  is  liable  for  a  trust 
fund  in  the  hands  of  the  party  for 
whom  he  is  receiver.  Reynolds  v. 
^tna  L.  Ins.  Co.  28  App.  Div.  591. 

When  a  receiver  makes  an  unau- 
thorized disposition  of  the  trust  fund 
confided  to  him,  to  a  person  cogniz- 
ant of  the  breach  of  it,  who  invests 
the  money,  such  person  becomes  a 
trustee  in  invitum  of  such  fund. 
Ooldthwaite  v.  Ellison,  99  Ala.  497. 

Collections  paid  to  the  receiver  of 
a  bank  may  Ije  a  trust  fund.  First 
Nat.  Bank  v.  Armstrong,  42  Fed. 
Rep.   193. 

He  is  liable  for  waste.  Turner  v. 
Peoria  d  S.  R.  Co.  95  111.  134,  35 
Am.  Rep.  144, 


A  receiver  cannot  be  compelled  to 
pay  over  money  to  an  attaching 
creditor  under  N.  Y.  Laws  1883, 
chap.  378,  §  8,  in  a  district  other 
than  that  in  which  he  was  appointed 
and  without  notice  to  the  attorney 
general.  Gillig  v.  George  C.  Tread- 
well  Co.  151  N.  Y.  552,  Reversing 
9  App.  Div.  624. 

Money  paid  to  a  receiver  can  only 
be  refunded  by  order  of  court.  Gee- 
ty  V.  Campbell,  2  Robt.  664. 

A  receiver  of  a  national  bank  will 
be  directed  to  pay  dividends  accumu- 
lated upon  stock  attached,  so  far  as 
possible,  in  suits  in  a  state  court, 
upon  a  joint  acquittance  and  indem- 
nity bond  tendered  by  a  person  hav- 
ing color  of  title  and  a  defendant  in 
the  attachment  who  joins  in  the  peti- 
tion for  payment  to  such  person. 
Bowles  V.  National  Union  Bank,  82 
Fed.  Rep.  696. 

A  receiver  is  liable  for  money 
paid  as  a  dividend  to  a  person  not  en- 
titled to  it  when  ordinary  care  would 
have  prevented  it.  Todd  v.  Medina, 
56  N.  J.  Eq.  83. 

Money  paid  by  a  station  agent  for 
overcharges  on  freight  should  be  re- 
turned to  him  from  the  money  in 
the  hands  of  the  receiver  of  the  rail- 
road. Grand  Trunk  R.  Co.  v.  Cen- 
tral Vermont  R.  Co.  88  Fed.  Rep. 
636. 

And  so  when  he  pays  money  with- 

71 


§  113 


RECEIVERSHIPS— SUPPLEINIENT. 


out  order  of  court  to  a  person  not 
entitled  to  priority,  lie  Osceola 
Milling  Co.  70  Mo.  App.  23. 

A  receiver  of  an  infant's  estate, 
required  to  invest  it  and  report  an- 
nually, was  held  liable  for  the  loss 
of  money  deposited  in  another  state, 
as  receiver,  on  which  interest  was 
paid,  where  no  report  to  the  court 


was  made,  and  the  bank  failed. 
State,  Collins,  v.  Gooch,  97  N.  C.  186. 

Money  wrongfully  paid  to  a  bank 
over  which  the  receiver  is  appointed 
must  be  returned  by  him.  People  v. 
Madison  Square  Bank,  75  Hun,  114. 

And  so,  where  it  is  wrongfully 
paid  to  the  receiver.  Barker  v. 
Clark,  12  Abb.  Pr.  N.  S.  106. 


Pag-e  208,  sec.  113. — Liability  for  personal  injury. 


The  receiver  of  a  short  line  of  road 
is  not  liable  for  injuries  by  a  receiver 
of  the  whole  line,  including  the  short 
line,  when  the  operation  is  for  the 
benefit  of  creditors  of  the  whole 
system.  Jones  v.  Schlapback,  81 
Fed.  Rep.  274. 

An  action  for  damages  for  bodily 
injuries  sustained  through  the  negli- 
gence of  a  railroad  company  within 
the  year  preceding  the  appointment 
of  a  receiver  of  the  company,  and  an 
order  directing  him  to  pay  all  lia- 
bilities for  such  injuries,  and  giving 
leave  generally  to  all  persons  to 
bring  suit  against  the  receiver  in 
other  courts  of  competent  jurisdic- 
tion without  previous  permission  of 
the  court  appointing  him, — may  be 
maintained  against  a  receiver  in  a 
state  court,  without  obtaining  spe- 
cial leave  therefor.  Walker  v. 
Green   (Kan.  App.)   55  Pae.  281. 

Nor  are  the  net  earnings  of  the 
receiver  liable  for  damages  of  the 
company.  Dexterville  Mfg.  &  B.  Go. 
V.  Case,  4  Fed.  Rep.  873. 

A  receiver  of  a  railroad  is  a 
"fellow  servant"  under  Minn.  Gen. 
Stat.  1894,  §  2701,  and  is  liable  for 
an  injury  to  an  employee.  Mikkel- 
son  V.  Truesdale,  63  Minn.  137. 

An  action  against  a  receiver  of  a 
railroad  corporation  is  within  the 
provisions  of  Ohio  act  April  2,  1890, 
making  railroad  companies  liable  in 
certain  cases  for  the  negligence  of 
fellow  servants  or  employees  who 
have  power  or  authority  to  direct  or 
control  the  one  injured.  Peirce  v. 
Tail  Dusen,  47  U.  S.  App.  339,  78 
Fed.  Rep.  693,  24  C.  C.  A.  280. 

The  words  "any  railroad"  in  Tex. 
Rev.  Stat.  1859,  art.  3017,  giving  a 
right  of  action  when  the  death  of  any 
person  is  caused  by  the  negligence  or 
73 


carelessness  of  a  receiver  in  charge 
or  control  of  any  railroad,  his  serv- 
ants, or  agents, — include  street  rail- 
ways. Bammel  v.  Kirby  (Tex.  Civ. 
App.)   47  S.  W.  392. 

The  exception  made  to  the  com- 
mon-law rule  precluding  recovery 
from  a  master  for  injuries  sustained 
through  the  negligence  of  a  coem- 
ployee,  by  Ga.  Civ.  Code,  §  2323;  in 
case  of  injuries,  did  not,  prior  to  the 
passage  of  Ga.  act  December  16, 
1895,  extend  to  an  employee  of  a  re- 
ceiver of  a  railroad  company;  and 
a  recovery  cannot  be  had  for  an  in- 
jury sustained  by  such  employee  be- 
fore the  passage  of  that  act.  Barry 
V.  MeGhec,  100  Ga.  759. 

An  action  for  personal  injuries  be- 
fore the  appointment  of  a  receiver 
cannot  be  maintained  against  him. 
It  must  be  brought  against  the  cor- 
poration. Finance  Co.  v.  Charles- 
ton, C.  &  C.  R.  Co.  40  Fed.  Rep.  508. 

Personal  injuries  inflicted  through 
the  negligence  of  a  receiver  .are  pay- 
able from  the  current  receipts.  Tex- 
as P.  R.  Co.  V.  Johnson,  76  Tex.  421; 
Ryan  v.  Hayes,  02  Tex.  42 ;  Barton 
V.  Barbour,  104  U.  S.  130.  26  L.  ed. 
675;  Kain  v.  Smith,  80  N.  Y.  470; 
Hale  V.  Frost,  99  U.  S.  389,  25  L.  ed. 
419. 

In  a  suit  against  receivers  for 
personal  injury,  where  no  personal 
judgment  is  asked,  it  is  not  impor- 
tant whether  the  defect  causing  the 
injury  exiated  when  they  were  ap- 
pointed, or  not,  or  whether  thoy  had 
sufTieient  time  to  repair  it.  Bonner 
V.  Mayficld,  82  Tex.  234. 

Joint  liability  of  corporation  and  re- 
ceiver. 

The  rule  in  regard  to  the  joint 
liability  of  the  receiver  and  the  cor- 


LIABILITY  OF  RECEIVER. 


§§  114,  118 


poration  over  which  he  is  appointed 
does  not  apply  to  a  corporation 
where  the  portion  of  the  road  on 
which  the  injury  happened  has  been 
taken  out  of  the  hands  of  the  cor- 
poration and  put  in  the  hands  of  the 
receiver.  Lock  v.  Franklin  d  H. 
Turnpk.  Co.  100  Tenn.  163. 

One  liaving  a  just  cause  of  action 
for  injuries  caused  by  the  manage- 
ment of  a  locomotive  engine  may 
bring  his  action  against  both  the 
railroad  company  and  receivers  ap- 


pointed to  take  charge  of  its  prop- 
erty, in  order  to  establish  his  de- 
mand in  one  action  against  which- 
ever is  legally  liable.  Union  P.  R. 
Co.  V.  Smith,  59  Kan.  80. 

When  a  railroad  is  in  the  hands  of 
and  being  operated  by  a  receiver, 
neither  the  company  nor  the  receiver 
is  liable  for  an  injury  to  one  em- 
ployee by  another  employee.  Young- 
blood  V.  Comer,  97  Ga.  152;  Hender- 
son V.  Walker,  55  Ga.  481 ;  Thurman 
\.  Cherokee  R.  Co.  5G  Ga.  376. 


Page  211,  sec.  114. — Liability  for  negligence. 


A  receiver  is  liable  for  negligence 
in  the  operation  of  a  railroad  to  the 
same  extent  as  the  corporation.  Con- 
tinental Trust  Co.  V.  Toledo,  St.  L. 
d  K.  C.  R.  Co.  89  Fed.  Rep.  637; 
Rouse  V.  Harry,  55  Kan.  589. 

The  provision  of  Mass.  Pub.  Stat. 
chap.  112,  §  214,  that  every  railroad 
corporation  shall  be  responsible  in 
damages  to  one  whose  property  is  in- 
jured by  fire  communicated  by  its 
locomotive  engines,  is  applicable  to 
receivers  and  authorizes  an  action 
against  them.  Wall  v.  Piatt,  169 
Mass.  398. 

And  a  Federal  receiver  is  required 
to  operate  and  manage  according  to 
the  requirement  of  the  valid  laws  of 
the  state.  Peirce  v.  Van  Dusen,  47 
U.  S.  App.  339,  78  Fed.  Rep.  693,  24 
C.  C.  A.  280. 


Although  the  liability  of  a  receiver 
of  a  railroad  is  official,  and  not  per- 
sonal, and  a  judgment  against  him 
is  payable  out  of  the  trust  property 
and  funds  brought  within  the  cus- 
tody of  the  court,  a  mere  allegation 
by  such  receiver  that  the  property 
and  funds  have  passed  out  of  his  pos- 
session and  beyond  his  control  will 
not  constitute  a  good  defense  in  an 
action  against  him  for  personal  in- 
juries alleged  to  have  been  negligent- 
ly inflicted,  where  it  does  not  appear 
that  the  receivership  has  terminated. 
Erh  V.  Popritz,  59  Kan.  264. 

Generally  a  receiver  is  responsible 
for  neglect  only,  but  if  he  by  his  ap- 
pointment assumes  the  duties  of  a 
guardian  his  liability  will  be  meas- 
ured by  that  of  a  guardian.  State, 
Collins,  V.  Gooch,  97  N.  C.  186. 


Page  217,  sec.  118. — Liability  for  supplies,  labor,  etc. 


It  is  the  duty  of  a  receiver  to  pay 
wages  from  the  first  money  in  his 
hands,  under  N.  Y.  Laws  of  1885, 
chap.  376.  Brown  v.  A.  B.  G.  Fence 
Co.  52  Hun,  151. 

The  receiver  by  his  contracts  may 
make  himself  personally  liable. 
Walsh  v.  Raymond,  58  Conn.  251. 

A  receiver  who,  without  an  order 
of  court  employs  a  person  to  manage 
a  hotel  owned  by  the  company  over 
whose  property  he  is  receiver,  and 
afterwards  leases  it  to  the  manager 
without  notice  to  a  person  furnish- 


ing the  hotel  with  supplies,  becomea 
personally  liable.  Sayles  v.  Jour- 
don,  19  N.  Y.  S.  R.  349. 

A  receiver  of  a  railroad  company 
Is  liable,  not  only  for  coal  received 
after  his  apjwintment  from  unloaded 
cars,  but  for  coal  which  was  in  the 
bins  at  the  date  of  his  appointment, 
and  which  he  took  possession  of 
and  used  in  the  operation  of  the  road. 
Virginia  &  A.  Goal  Co.  v.  Central  R. 
d  Bkg.  Co.  30  U.  S.  App.  263 ;  Clark 
V.  Central  R.  d  Bkg.  Go.  66  Fed.  Rep. 
803,  14  C.  C.  A.  112. 

78 


§§  119-124  RECEIVERSHIPS— SUPPLEMENT. 

Page  218,  sec.  119. — Liability  for  money  deposited  in  bank. 

A  receiver  is  liable  for  money  de-       Ficcncr  v.  Bott,  20  Ky.  L.  Rep.  632. 
posited  iu  a  bank  without  authority. 

Page  219,  sec.  120. — For  costs  and  expenses. 


A  receiver  may  be  allowed  inter- 
est on  moneys  advanced.  Re  Bush- 
ell,  L.  R.  23  Ch.  Div.  75. 

A  receiver  is  not  personally  liable 
for  expenses  in  unreasonably  de- 
fending an  action,  when  no  notice 
was  given  that  an  application  for 
such  purpose  would  be  made.  First 
jS^at.  Bank  v.  Washburn,  20  App. 
Div.  518. 

His  liability  for  costs  is  the  same 


as  his  principal's.  Columbia  Ins.  Co. 
V.  Stevens,  37  N.  Y.  53(1. 

A  receiver  is  chargeable  with  costs 
personally  for  improperly  and  in  bad 
faith  contesting  a  claim.  Bourdon 
v.  Martin,  74  Hun,  240. 

Costs  may  be  awarded  against  a 
receiver  personally  where  he  acts 
carelessly  and  without  permission  of 
the  court.  Re  Castle,  2  N.  Y.  S.  R. 
302. 


Page  220,  sec.  121. — For  rents. 


The  receiver  of  a  national  bank  ap- 
pointed by  the  comptroller  of  the 
currency  is  not  responsible  to  the 
owner  of  real  estate  for  rents  re- 
ceived by  him  and  paid  into  the 
United  States  Treasury  under  U.  S. 
Rev.  Stat.  §  5234.  Uitz  v.  Jenks, 
123  U.  S.  297,  31  L.  ed.  156. 

Defendant  can  collect  rents  of  a 
receiver  on  giving  security  to  him. 
Garr  v.  nUl,  5  N.  J.  Eq.  039. 


A  receiver  is  chargeable  with  rents 
for  such  time  as  he  occupies  the 
premises  demised.  Frank  v.  New 
York,  L.  E.  &  W.  R.  Co.  122  N.  Y. 
197. 

A  landlord  is  entitled  to  an  order 
on  a  receiver  for  rent  up  to  the  time 
of  the  declaration  of  insolvency,  not 
exceeding  one  year.  Wood  v.  Mc- 
Cardell,  F.  &  W.  Carriage  Co.  49  N. 
J.  Eq.  433. 


Page  224,  sec.  124. — Liability  on  leases. 


Continued  possession  of  the  prem- 
ises by  the  receiver,  under  the  order 
of  court,  is  sufficient  notice  to  the 
landlord  of  the  receiver's  intention 
to  carry  out  the  lease.  Link  Belt 
Machinery  Co.  v.  Hughes,  174  111. 
155,  Affirming  62  111.  App.  318. 

Retaining  possession  of  the  prem- 
ises for  more  than  three  months 
makes  the  receiver  liable  for  the  re- 
mainder of  the  term.  De  Wolf  v. 
Royal  Trust  Co.  173  ill.  435,  Revers- 
ing 72  111.  App.  411. 

Continued  occupation  of  the  prem- 
ises without  any  act  of  disaffirmance, 
or  notice  to  the  lessor  that  he  would 
not  be  bound  by  the  lease,  binds  the 
receiver  to  pay  the  stipulated  rent. 
Link  Belt  Machinery  Co.  v.  Hughes, 
174  111.  155,  Aff'g  02  111.  App.  318. 

Express  words  of  adoption  are 
not  required.  Central  Trust  Co.  v. 
Continental  Trust  Co.  58  U.  S.  App. 
604,  SO  Fed.  517,  30  C.  C.  A.  235. 

Adoption  may  be  implied  from  the 
74 


receiver's  unequivocal  acts  inconsist- 
ent with  the  landlord's  right  of  re- 
entry, and  indicating  an  intention  to 
adopt  the  lease  and  conform  to  its 
condition.  Spencer  v.  World's  Col- 
umbian Exposition,  163  111.  117. 

Taking  possession  with  full  au- 
thority, and  using  leased  property 
with  knowledge  of  the  lease  and  its 
burdens,  binds  the  receiver  as  as- 
signee of  the  lease.  Easton  v.  Hous- 
ton d  T.  C.  R.  Co.  38  Fed.  Rep.  784. 

Receivers  are  liable  for  the  rentals 
of  branch  roads  operated  as  an  en- 
tire system.  Central  R.  d  Bkg.  Co. 
V.  Farmers'  Loan  &  T.  Co.  79  Fed. 
Rep.  158. 

The  payment  of  rent  by  a  receiver 
on  premises  formerly  occupied  by  the 
company  for  which  he  is  receiver,  up 
to  and  including  a  fixed  date,  fixes 
his  liability  by  acceptance  for  rents 
subsequent.  Moore  v.  Higgins,  2 
Silv.  Sup.  Ct.  298. 

Receivers  authorized  by  the  court 


LIABILITY  OF  RECEIVER. 


§  125 


to  continue  a  contract  for  rental  and 
repairs  are  not  released  from  liabil- 
ity without  notice  to  the  lessor  by 
ceasing  to  use  the  cars  operated  un- 
der the  lease.  Mercantile  Trust  d 
Deposit  Co.  V.  Southern  Iron  Car 
Line  Co.  113  Ala.  543. 

If  the  receiver  becomes  liable  for 
the  rent  according  to  the  terms  of 
the  lease,  the  rerenting  of  the  prem- 
ises after  he  vacates  does  not  relieve 
him  from  liability  for  the  dimin- 
ished amount  of  rent,  on  the  ground 
that  it  is  contingent.  People  v. 
Saint  Xicliols  Bank,  151  N.  Y.  592. 

A  receiver  who  occupies  the  leased 
premises  during  the  remaining  por- 
tion of  the  term  must  pay  the  stip- 
ulated rent.  Spencer  v.  World's 
CoLumhian  Exposition,  163  111.  117; 
Morrison  v.  Blackall,  68  111.  App. 
504. 

A  reference  to  ascertain  the  rea- 
sonable rental  is  not  necessary  where 
the  receiver  has  adopted  the  lease. 


Spencer  v.  World's  Columbian  Ex- 
position, 163  111.  117. 

A  receiver  has  a  reasonable  time 
to  determine  whether  he  will  adopt 
a  lease;  but  where  the  lessor  de- 
mands immediate  surrender  or  adop- 
tion and  several  months  elapse  be- 
fore determination,  the  receiver  must 
pay  full  rental  while  occupying. 
Farmers'  Loan  d  T.  Co.  v.  Northern 
P.  R.  Co.  58  Fed.  Rep.  257. 

A  receiver  of  a  railroad  is  liable 
for  the  reasonable  rental  value  of 
the  use  and  enjoyment  of  terminal 
facilities  supplied  by  another  com- 
pany and  indispensable  to  the  suc- 
cessful operation  and  management  of 
the  road,  enhancing  the  income  and 
value  of  the  property  in  the  receiv- 
er's hands,  although  not  necessarily 
at  the  rate  fixed  by  the  contract  by 
the  railroad  company.  Savannah,  F. 
d  W.  R.  Co.  V.  Jacksonville,  T.  &  E. 
W.  R.  Co.  52  U.  S.  App.  51,  79  Fed. 
Rep.  35,  24  C.  C.  A.  437. 


Page  224,  sec.  125. — Liability  on  contracts  other  than  leases. 


The  receiver  is  not  permitted  to 
repudiate  the  existing  contracts  of 
the  corporation  over  which  he  is  ap- 
pointed. Worthington  v.  Oak  & 
Highland  Park  Improv.  Co.  100 
Iowa,  39. 

And  he  is  liable  for  damages  grow- 
ing out  of  his  refusal  to  complete 
contracts.  Moore  v.  Potter,  155  N. 
Y.  481,  Reversing  87  Hun,  334. 

If  he  adopts  the  contract  and  re- 
ceives the  benefit,  he  must  pay  the 
contract  price.  Spencer  v.  World's 
Columbian  Exposition,  163  111.  117. 


But  he  has  a  right,  subject  to  the 
order  of  the  court,  to  determine 
whether  he  will  perform  an  execu- 
tory contract,  and  has  a  reasonable 
time  in  which  to  determine.     Ihid. 

He  must  perform  his  own  con- 
tracts. Wahash,  St.  L.  &  P.  R.  Co. 
v.  Central  Trust  Co.  22  Fed  Rep. 
269. 

If  the  receiver  rescinds  a  sale,  he 
must  pay  the  purchaser  reasonable 
counsel  fees.  Drake  v.  Goodridge,  6 
Blatchf.  531. 


Liability  in  other  cases. 


A  receiver  of  a  corporation,  in  the 
absence  of  any  sufficient  explanation 
of  the  circumstances,  is  properly  sur- 
charged with  the  difference  between 
the  appraised  value  of  goods  and  the 
amount  for  which  they  were  sold, 
where  he  had  a  prospective  interest 
in  the  firm  which  purchased  the 
same.  French  v.  Pittsburgh  Vehicle 
d  Harness  Co.  184  Pa.  161. 

If  a  receiver  is  derelict  in  paying 


out  money  when  he  ought,  he  is  li- 
able for  interest.  Johnson  v.  Moon, 
82  Ga.  247. 

And  so  where  he  refuses  to  pay  a 
lawful  claim.  People  v.  E.  Reming- 
ton &  Sons,  59  Hun,  307. 

A  receiver  is  liable  for  his  tortious 
acts.  Gutsch  v.  Mcllhargey,  69 
Mich.  377. 

A  receiver  may  be  liable  as  such 
for  acts  of  his  attorney  and  agents, 

75 


§  125 


RECEIVERSHIPS— SUPPLEMENT. 


payable  from  fund  in  court,  but  not 
personally.  Morris  v.  11  Her,  57  How. 
Pr.  322. 

Where  a  valid  stixtute  or  ordi- 
nance requires  a  corporation  to  do 
a  particular  thing,  its  receiver  is  al- 
so liable,  as  in  the  case  of  building 
fences  along  a  railroad.  Ohio  &  M. 
R.  Co.  V.  liussell,  115  111.  52. 

Or  the  construction  of  a  railroad 
crossing.  Fort  Dodge  v.  Minneapo- 
lis d  St.  L.  It.  Co.  87  Iowa,  389. 

The  receiver  in  a  mortgage  fore- 
closure is  liable  only  for  the  net  pro- 
ceeds of  crops  harvested  by  him. 
Locke  V.  Klunker,  123  Cal.  231. 

A  public  nuisance  erected  by  a  re- 
ceiver may  be  removed,  such  as  a 
fence  in  the  highway,  but  not  by  in- 
junction. Felton  v.  Ackcrman,  22 
U.  S.  App.  154,  Gl  Fed.  Rep.  225,  9 
C.  C.  A.  457. 

He  is  liable  for  taxes  assessed 
against  an  insolvent  bank  for  which 
he  is  receiver.  Hamacker  v.  Com- 
mercial Bank,  95  Wis.  359. 

It  is  the  duty  of  the  judge  by 
whom  the  receiver  of  an  insolvent 
corporation  was  appointed,  upon  a 
proper  application  of  the  tax  col- 
lector, to  order  the  receiver  to  sell 
enough  of  the  property  to  raise  the 
money  with  which  to  pay  overdue 
taxes,  where  the  corporation  is  al- 
ready two  years  in  default  in  the 
payment  of  tlie  state  and  county 
taxes,  and  the  taxes  for  a  third  year 
will  soon  become  due.  Dysart  v. 
Brown,  100  Ga.  1. 

That  all  the  income  derived  by  a 
receiver  from  carrying  on  the  busi- 
ness of  a  corporation  is  requisite  to 
the  operation  of  such  business  is  no 
legal  excuse  for  his  failure  to  pay 
state  and  county  taxes  for  which  the 
corporation  is  two  years  in  default. 
Ibid. 

A  receiver  of  an  assessment  insur- 
ance companj%  who  petitions  the 
court  for  leave  to  pay  death  claim- 
ants, and  carefully  avoids  giving  to 


persistent  members  notice  of  his  ap- 
plication, or  an  opportunity  to  be 
heard  thcreouj  will  not  be  protected 
as  to  payment  to  such  death  claim- 
ants, made  in  pursuance  of  an  order 
granted  upon  such  application.  Peo- 
ple V.  Family  Fund  8oc.  31  App.  Div. 
IGG. 

The  receiver  of  a  mutual  insur- 
ance company  cannot  allow  losses 
occurring  after  the  entry  of  the  de- 
cree of  forfeiture  of  the  charter.  In- 
surance Conirs.  V.  Commercial  Mut. 
Ins.  Co.  20  R.  I.  7. 

A  receiver  of  a  mutual  insurance 
company  may  recognize  claims  filed 
with  the  company  in  the  same  man- 
ner as  is  required  by  the  decree, 
though  they  have  never  been  pre- 
sented to  him  according  to  the  de- 
cree, if  he  is  satisfied  that  they  are 
just.     Ihid. 

The  receivers  of  the  property  of 
the  Union  Pacific  Railroad  Com- 
pany, who  are  also  appointed  receiv- 
ers of  the  property  of  the  constitu- 
ent corporation  forming  with  it  the 
Union  Pacific  system,  took  the  prop- 
erty of  each  corporation  charged 
with  a  trust  for  tne  benefit  of  its 
own  creditors  and  stockholders,  and 
could  not  divert  the  income  or  prop- 
erty of  the  Union  Pacific  Railroad 
Company  to  pay  a  deficit  incurred 
by  the  operation  of  a  constituent 
railroad.  Ames  v.  Union  P.  R.  Co. 
74  Fed.  Rep.  335. 

In  determining  whether  there  has 
been  a  diversion  of  current  income 
by  a  railroad  company  to  the  pay- 
ment of  interest  on  a  second  mort- 
gage debt,  or  in  present  improvement 
on  the  mortgaged  property,  income 
applied  to  payment  on  senior  mort- 
gages is  properly  excluded  from  con- 
sideration. Belknap  v.  Central 
Trust  Co.  47  U.  S.  App.  663,  sub 
nam.  Central  Trust  Co.  v.  East  Ten- 
nessee, V.  &  O.  R.  Co.  80  Fed.  Rep. 
G24,  26  C.  C.  A.  30. 


Liability  of  parties  other  than  receiver. 


Where  a  receiver  is  discharged 
and  the  property  turned  back  by  a 
consent  decree  subject  to  all  claims 
and  liabilities,  the  company  is  liable 
76 


for  all  injuries  growing  out  of  neg- 
ligence. Missouri,  K.  &  T.  R.  Co. 
V.  Chilton,  7  Tex.  Civ.  App.  183; 
Texas  &  P.  R.  Co.  v.  Bloom,  23  U.  S. 


LIABILITY  OF  KECEIVER. 


125 


App.  143,  60  Fed.  Hep.  979,  9  C.  C. 
A.  300. 

Where  a  railroad  is  run  on  the 
joint  account  of  a  receiver  of  part 
and  lessees  of  part,  it  is  liable  for 
injury  to  a  passenger,  committed  by 
a  servant,  the  ticket  being  in  the 
name  of  the  company.  Washi7igton, 
A.  &  G.  R.  Co.  V.  Brown,  17  Wall. 
445,  21  L.  ed.  675. 

A  railroad  company  is  not  liable 
for  the  negligence  of  a  receiver 
operating  a  railroad  under  direction 
of  the  court.  Howe  v.  St.  Clair,  8 
Tex.  Civ.  App.  101. 

A  corporation  to  which  its  prop- 
erty and  control  of  its  affairs  have 
been  returned  by  a  receiver  is  not 
liable  for  personal  injuries  caused  by 
negligence  in  the  operation  of  its 
electric  plant  during  the  receiver- 
ship. Bartlett  v.  Cicero  Light,  H. 
&  P.  Co.  69  111.  App.  576. 

That  a  railroad  was  in  the  hands 
of  a  receiver  is  a  defense  to  an  action 
against  it  for  personal  injury.  Trin- 
ity &  8.  R.  Co.  V.  Brown,  91  Tex. 
673. 

A  railway  company  is  not  liable 
for  an  injury  caused  by  the  man- 
agement of  a  locomotive  engine, 
where  receivers  are  in  entire  and  ex- 
clusive control  of  the  property. 
Union  P.  R.  Co.  v.  Smith,  59  Kan. 
80. 

If  the  appointment  is  procured  by 
collusion  between  the  company  and 
its  creditors,  or  if  the  road  is  oper- 
ated by  the  receiver  appointed  by  a 
court  without  jurisdiction,  the  cor- 
poration will  be  liable  for  the  acts 
of  the  receiver.  Texas  d  P.  R.  Co. 
v.  Johnson,  76  Tex.  421. 

A  railroad  company  is  not  liable 
to  penalties  for  neglect  to  feed  ani- 
mals being  shipped  when  in  the 
hands  of  receivers.  Texas  &  P.  R. 
Co.  V.  Barnhart,  5  Tex.  Civ.  App, 
601. 

The  Texas  act  of  March  19,  1889, 
providing  that  when  a  receiver  is 
discharged  and  the  property  restored 
the  owner  shall  be  responsible  for 
all  liabilities,  is  not  unconstitution- 
al. Missouri,  K.  &  T.  R.  Co.  v.  Chil- 
ton, 7  Tex.  Civ.  App.  183. 

A  railroad  company  is  liable  for 
the  loss  of  goods  by  a  receiver  when 
he  has  turned  it  back  with  better- 


ments. Houston  &  T.  C.  R.  Co.  v. 
McFadden,  91  Tex.  194,  Affirmed  in 
Part  and  Reversed  in  Part  in  42  S. 
W.  593. 

An  action  for  injury  or  death 
caused  by  negligence  of  a  receiver  of 
a  corporation  may  be  brought 
against  the  corporation  after  the 
property  has  been  restored  to  it  on 
the  receiver's  discharge,  and  the 
property  or  fund  charged  with  the 
liability.  Bartlett  v.  Cicero  Light, 
H.  &  P.  Co.  177  111.  68,  42  L.  R.  A. 
715. 

The  rule  in  Texas,  is  that  where 
there  is  a  sale  of  the  property  a  rail- 
way company  cannot  be  held  liable 
for  damages  accruing  while  its  prop- 
erty is  in  the  hands  of  a  receiver, 
unless  it  is  alleged  and  proved  that 
earnings  of  the  road  were  invested 
by  the  receiver  in  improvements 
thereon.  Ray  v.  Dillingham  (Tex. 
Civ.  App.)  41  S.  W.  188. 

The  liability  of  a  railroad  com- 
pany for  personal  injuries  is  lim- 
ited by  the  amount  expended  in  bet- 
terments. Texas  P.  R.  Co.  v.  John- 
son, 76  Tex.  421. 

Liability  of  a  railway  company  for 
a  personal  injury  depends  upon  the 
return  of  the  road  by  the  receiver 
improved  by  his  expenditures  for 
betterments.  Texas  &  P.  R.  Co.  v. 
Brick,  83  Tex.  526 ;  Texas  P.  R.  Co. 
V.  Overheiser,  76  Tex.  437;  Texas  P. 
R.  Co.  V.  Johnson,  76  Tex.  421. 

A  railroad  company  which  pro- 
cures or  acquiesces  in  the  withdraw- 
al of  a  receivership  and  the  dis- 
charge of  the  receiver  and  the  can- 
celation of  his  bond,  and  accepts  the 
restoration  of  its  road  largely  en- 
hanced in  value  by  betterments,  may 
be  sued  in  assumpsit  on  a  claim 
which  was  valid  against  the  receiv- 
er, but  not  satisfied  by  him  or  by  the 
court  which  discharged  him, — at 
least  when  it  does  not  claim  that  the 
amount  of  the  betterments  was  less 
than  the  demand  sued  on.  Texas  & 
P.  R.  Co.  V.  Bloom,  164  U.  S.  636,  41 
L.  ed.  580. 

Provision  cannot  be  made  for  pay- 
ment by  a  mortgagor  of  the  compen- 
sation and  expenses  of  a  receiver  of 
the  mortgaged  premises,  appointed 
ex  parte  by  the  court  without  au- 
thority, as,  if  any  provision  is  made, 

77 


§  125 


RECEIVERSHIPS— SUPPLEMENT. 


the  party  who  improperly  procures 
the  appointment  should  be  required 
to  pay.  Coiiper  v.  iShirlei/,  44  U.  S. 
App.  586,  75  Fed.  Rep.  1U8,  21  C.  C. 
A.  28S. 

Parties  at  whose  instance  a  re- 
ceiver is  appointed  may  be  compelled 
to  pay  expenses  incurred  by  him  in 
the  management  of  the  estate,  where 
tlie  estate  is  insufficient  or  fails. 
Knickerbocker  v.  McKindley  Coal  & 
Mill.  Co.  67  111.  App.  291. 

An  action  against  a  railroad  com- 
pany for  damages  for  personal  in- 
juries received  by  a  passenger  on  the 
raili'oad  when  in  the  hands  of  a  re- 
ceiver, but  which  is  restored  to  the 
company  largely  enhanced  in  value, 
is  not  cut  ofl'  by  failure  to  present 
the  claim  by  intervention  in  the  re- 
ceivership case,  under  an  order  pro- 
viding for  such  claims  and  that  if 
not  so  presented  by  a  certain  date 
they  shall  be  barred  and  not  a  charge 
on  the  property  of  the  company, 
since  this  merely  limits  the  time  for 
intervention,  but  does  not  preclude 
other  remedies  which  may  be  within 
the  reach  of  the  claimants.  Texas 
tC  P.  R.  Co.  V.  Bloom,  104  U.  S.  636, 
41  L.  ed.  580. 

A  carrier  is  not  liable  for  injuries 
to  cattle  shipped  over  its  line  under 
a  contract  made  with  a  receiver  aft- 
er all  the  railroad  property  was  sold 
and  before  its  delivery  to  the  rail- 
road company,  where  no  betterments 
or  permanent  improvements  of  the 
property  with  funds  derived  from 
the  operation  of  the  road  were  made. 
Holman  v.  Galveston,  H.  d  S.  A.  R. 
Co.  14  Tex.  Civ.  App.  499. 

A  railroad  company  is  not  liable 
for  the  acts  of  its  receiver  or  those 
of  his  employees.  Louisville  8.  R. 
Co.  v.  Tucker,  20  Ky.  L.  Rep.  1303. 

A  temporary  receiver  as  such  has 
no  authority  to  continue  the  business 
of  the  concern,  and  unless  he  is  au- 
thorized to  do  so  by  the  court  the  es- 
tate cannot  be  charged  with  liability 
incurred  by  him  in  the  business. 
Appleton  V.  Welch,  20  Misc.  343. 

A  loss  growing  out  of  the  default 
of  a  receiver  must  be  borne  by  the 
estate.     Hutchinson   v.    Massareene, 

2  Ball  &  B.  55;  cf.  Rigge  v.  Bowater, 

3  Bro.  Ch.  365. 

The  expenses  of  operating  are 
78 


chargeable  first  on  the  net  income, 
and,  that  being  insufficient,  on  the 
property  or  its  proceeds.  IJlUs  v. 
Vernon  Ice,  Light,  &  W.  Co.  86  Tex. 
109. 

The  first  mortgage  bondholders  of 
a  railroad,  purchasing  at  foreclosure 
sale,  are  not  required  to  restore  for 
the  benefit  of  unsecured  creditors  the 
amounts  paid  from  the  earnings 
while  in  the  hands  of  receivers  for 
taxes  and  insurance.  Farmers'  Loan 
d  T.  Co.  V.  Fidelity  Ins.  T.  d  S.  D. 
Co.  (Tex.  Civ.  App.)  41  S.  W.  113. 

A  new  corporation  to  whom  rail- 
way property  is  turned  over  by  re- 
ceivers the  day  after  the  accident  of 
wliich  plaintiff  complains  is  not  li- 
able therefor,  since  the  receivers 
were  neither  its  agents  nor  servants, 
but  were  put  in  control  of  the  prop- 
erty by  an  adverse  act.  Archavibeau 
v.  New  York  d  N.  E.  R.  Co.  170 
Mass.  272. 

A  purchaser  of  a  railroad  under  a 
mortgage  foreclosure  is  liable  to  a 
passenger  who  sustained  personal 
injuries  in  a  collision  of  two  trains, 
while  the  road  was  operated  by  re- 
ceivers, appointed  by  the  United 
States  district  court,  where  the  de- 
cree of  that  court  directing  fore- 
closure required  the  purchaser,  as  a 
part  of  the  purchase  price  and  in  ad- 
dition to  the  sum  paid,  to  pay  all  li- 
abilities incurred  by  the  receivers 
before  delivery  of  possession  of  the 
property.  Atchison,  T.  d  S.  F.  R. 
Co.  V.  Cunningham,  59  Kan.  722. 

A  purchaser  of  a  railroad  from  a 
prior  purchaser  at  a  receiver's  sale 
is  not  liable  for  personal  injuries  ac- 
cruing during  the  operation  of  the 
road  by  the  receiver,  where  the  evi- 
dence fails  to  show  whether  the  bet- 
terments relied  upon  to  charge  it  were 
made  before  or  subsequent  to  the  re- 
ceiver's sale,  and  there  is  no  evi- 
dence tending  to  show  that  it  had 
any  interest  in  the  property  or  any 
control  over  the  same  when  the  in- 
juries were  sustained.  Ilouston 
Electric  Street  R.  Co.  v.  Bell  (Tex. 
Civ.  App.)  42  S.  W.  772. 

A  purchaser  at  foreclosure  sale  of 
a  railroad  in  the  hands  of  a  receiver 
is  liable  for  personal  injury  between 
the  date  of  confirmation  and  the 
date  of  delivery,  to  the  extent  of  the 


LIABILITY  OF  RECEIVER. 


§125 


permanent  improvement  made  dur- 
ing such  period,  but  not  prior  there- 
to. Crawford  v.  Houston  &  T.  C.  R. 
Co.  89  Tex.  89. 

A  claim  for  injury  from  the  neg- 
ligent operation  of  a  railroad,  on 
which  judgment  was  rendered 
against  the  receiver  after  which  he 
settled  his  accounts  and  paid  over 
under  the  order  of  court  the  balance 
in  his  hands,  did  not  stand  on  a  foot- 
ing with  the  expenses  of  the  receiv- 
ership, and  no  lien  was  created  on 
the  property;  and  a  purchaser  at 
the  foreclosure  sale  was  not  liable. 
White  V.  Keokuk  &  D.  M.  R.  Co.  b2. 
Iowa,  97. 

The  purchaser  of  a  railroad  is  li- 
able for  damages  caused  by  negli- 
gence of  a  receiver,  if  betterments 
upon  the  road  by  the  receiver  subse- 
quent to  the  sale,  and  the  earnings 
turned  over  to  the  purchaser,  ex- 
ceeded in  value  the  liabilities  im- 
posed upon  the  purchaser  by  the  de- 
cree of  the  court  and  the  operating 
expenses  of  the  receiver  and  claims 
for  damages  against  him.  Houston 
&  T.  C.  R.  Co.  V.  Kelly  (Tex.  Civ. 
App.)  35  S.  W.  878. 

The  purchaser  of  a  railroad  in  the 
hands  of  a  receiver,  whose  contract 
makes  it  liable  for  the  obligations 
of  the  receiver,  is  liable  to  pay  a 
judgment  entered  against  the  re- 
ceiver on  a  supersedeas  bond  which 
he  had  executed  to  appeal  a  judg- 
ment against  the  railroad, — especial- 
ly where  the  road  was  improved  and 
bettered  while  in  the  hands  of  the 
receiver  to  an  amount  in  excess  of 
such  judgment.  Missouri,  K.  &  T. 
R.  Co.  V.  Lacy,  13  Tex.  Civ.  App. 
391. 

The  purchaser  of  a  railroad  from 
a  receiver  is  liable  for  the  negligent 
loss  of  cotton  shipped  over  such  road 
after  the  sale  of  the  road  and  its  con- 
firmation, although  it  was  still  being 
operated  by  the  receiver  and  no  bet- 
terments or  improvements  were 
made  during  such  period,  where  it 
continued  to  be  operated  by  the  re- 
ceiver directly  in  opposition  to  the  or- 
ders of  the  court  and  for  the  express 


benefit  of  the  purchaser.  Houston 
d  T.  C.  R.  Co.  V.  Bath,  17  Tex.  Civ. 
App.  697. 

Purchasers  on  foreclosure  of  the 
property  of  a  railroad  company,  who 
have  assumed  payment  of  debts  due 
by  the  receiver,  must  pay  in  full  a 
debt  due  to  an  association  in  which 
they  own  a  half  interest,  where  by 
the  mutual  agreement  by  which 
such  association  was  formed  all  the 
earnings  were  to  go  first  into  the 
hand  of  the  agents,  and  the  several 
interests  of  the  principals  do  not 
arise  until  the  accounts  in  the  hands 
of  the  agents  are  made  up.  State 
V.  Port  Royal  &  A.  R.  Co.  79  Fed. 
Rep.  397. 

A  railroad  mortgagee  is  not  liable 
for  unpaid  wages  or  other  obliga- 
tions incurred  by  a  receiver  ap- 
pointed at  the  mortgagee's  instance 
in  a  foreclosure  suit,  although  the 
trust  fund  is  insufficient  to  pay  them, 
unless  such  responsibility  was  im- 
posed by  the  court  as  a  condition  of 
the  appointment  or  the  continuance 
of  the  receiver  in  office.  Farmers' 
Loan  d  T.  Co.  v.  Oregon  P.  R.  Co. 
31  Or.  237,  38  L.  R.  A.  424. 

Although  a  receiver  of  a  corpora- 
tion, appointed  by  trustees  in  a 
mortgage  pursuant  to  a  power  there- 
in contained,  providing  that  such  re- 
ceiver shall  be  the  agent  of  the  com- 
pany, which  alone  shall  be  liable  for 
his  acts  and  defaults,  ceases  to  be 
the  agent  of  the  company  upon  a 
compulsory  winding-up  order,  he 
does  not  thereupon  become  the 
agent  of  the  trustees  in  the  mort- 
gage, so  as  to  render  them  liable  for 
goods  afterwards  purchased  by  him 
in  carrying  on  the  business.  Gosling 
V.  Gaskcll  [1897]  A.  C.  575,  77  L.  T. 
N.  S.  314,  66  L.  J.  Q.  B.  N.  S.  848. 

When  the  order  appointing  is  re- 
versed the  receivers'  fees  must  be 
paid  by  the  unsuccessful  party,  and 
not  from  property.  Weston  v.  Watts, 
45  Hun,  219. 

A  defendant  is  not  liable  for  loss 
of  property  in  the  hands  of  a  receiv- 
er.    Lee  V.  Cone,  4  Coldw.  392. 


79 


§  133-148  RECEIVERSHIPS— SUPPLEMENT. 

Page  233,  sec.  133.— Effect  of  discharge. 


After  the  discharge  of  a  receiver, 
and  surrender  by  him  of  the  prop- 
erty in  his  liands,  he  is  discharged 


from  further  liability.  New  York 
cC  W.  U.  Teleg.  Co.  v.  Jewett,  115  N. 
Y.  lOG. 


Page  235,  sec.  146. — Creditors'  bills;  general  nature  of  remedy. 


A  receiver  is  allowed  in  favor  of  a 
purchaser,  in  an  action  to  rescind 
for  fraudulent  misrepresentations. 
Oibbs  V.  David,  L.  R.  20  Eq.  373. 

Receiver  for  rents  appointed  in  a 
creditors'  bill.  Johnson  v.  Wood- 
ruff, 8  N.  J.  Eq.  120,  Affirmed  Id. 
729. 

The  appointment  of  a  receiver  is 
proper  on  filing  a  creditors'  bill. 
Central  Nat.  Bank  v.  Graham 
(Mich.)  5  Det.  L.  N.  591,  76  N.  W. 
1042. 

And  particularly  so  where  the  bill 
is  confessed.  Runals  v.  Harding,  83 
111.  75. 

A  receiver  of  a  corporation  will 
not  be  appointed  on  a  creditors'  bill, 
based  on  a  judgment  recovered 
against  the  cor2Joration  on  notes  ex- 
ecuted by  the  corporation  to  a  di- 
rector, while  solvent,  for  money 
loaned  to  the  corporation,  although 
it  subsequently  became  insolvent  be- 
fore the  judgment  was  taken,  as  a 
director  of  a  solvent  corporation  in 
good  faith  may  loan  it  money,  and 
the  subsequent  insolvency  of  the  cor- 
poration will  not  affect  his  right  to 
recover  the  loan.  Eudlun  v.  Blakes- 
lee,  70  III.  App.  G64. 

Leave  to  file  a  creditors'  bill 
against  a  corporation  and  its  receiver 
need  not  be  granted  in  the  action  in 
which  the  receiver  was  appointed, 
but  is  sufficient  when  obtained  in  the 
same  court  in  which  the  receivership 
action  is  pending,  where  the  latter 
was  not  instituted  for  the  purpose  of 
winding  up  the  affairs  of  the  corpo- 
ration and  distributing  its  property 
among  creditors.  Sligh  v.  Shelton 
S.  W.  R.  Co.  20  Wash.  16. 


A  summons  may  be  issued  against 
a  judgment  debtor  for  whom  a  re- 
ceiver has  been  appointed,  and 
against  whom  a  creditors'  bill  is 
pending,  requiring  him  to  appear  be- 
fore the  circuit  court  commissioner 
for  examination,  although  proof  has 
not  been  made  of  service  of  the  order 
appointing  a  receiver,  whore  such  or- 
der directed  the  commissioner  to  is- 
sue a  summons  on  request.  Central 
Nat.  Bank  v.  Graham  (Mich.)  5  Det. 
L.  N.  591,  76  N.  W.  1042. 

Under  a  creditors'  bill,  where  it 
appears  that  there  is  no  personal  es- 
tate, and  that  the  real  estate  must 
be  applied  to  debts,  a  receiver  will 
be  appointed  in  the  first  instance. 
Jones  V.  Pugh,  8  Ves.  Jr.  71. 

Execution  must  issue  to  the  coun- 
ty in  which  the  judgment  debtor  re- 
sides. Strange  v.  Longlcy,  3  Barb. 
Ch.  650. 

A  proceeding  to  declare  a  debtor 
an  insolvent,  to  set  aside  alleged 
preferences,  and  procure  the  appoint- 
ment of  a  receiver,  brought  under 
Wis.  Laws  1897,  chap.  334,  author- 
izing creditors  holding  claims  aggre- 
gating not  less  than  $200  to  insti- 
tute such  proceeding  within  thirty 
days  after  the  creation  of  the  pref- 
erence, cannot  be  maintained  by 
creditors  whose  claims  aggregate  less 
than  the  required  amount,  nor  can 
their  amount  be  increased  by  the 
costs  incurred  upon  their  reduc- 
tion to  judgment  although  incurred 
within  such  thirty  days.  Woodard 
c£  ;S.  Co.  v.  mines,  101  Wis.  329. 


Page  241,  sec.  148. — Fraudulent  conveyances. 


An  injunction  may  properly  be 
granted  and  receivers  appointed  in 
an  action  involving  the  fraudulent 
80 


character  of  a  deed  by  the  executor 
and  sole  heir  of  a  decedent,  to  a  sister 
of  the  latter  in  settlement  of  an  al- 


CREDITORS'  BILLS,  ETC. 


§148 


leged  debt  due  to  such  sister,  where 
there  is  evidence  warranting  a  judge 
in  finding  that  no  such  indebtedness 
ever  really  existed.  Brown  v.  Stan- 
ley, 105  Ga.  409. 

A  receiver  will  not  be  appointed 
in  an  action  brought  by  creditors  in 
their  own  behalf  to  set  aside  a  trans- 
fer of  real  property  as  fraudulent 
against  them.  Harris  v.  Buchner, 
35  App.  Div.  594. 

A  receiver  may  be  appointed  in  an 
action  by  a  judgment  creditor  to  set 
aside  a  fraudulent  conveyance  of  the 
land,  although  the  judgment  debtor 
has  only  an  equity  of  redemption  in 
the  land, — especially  where  the 
fraudulent  grantee  is  in  possession 
of  the  land  and  receiving  the  rents 
thereof.  Freeman  v.  Stuart  (Ala.) 
24  So.  31. 

A  receiver  pendente  lite  will  not 
be  appointed  in  an  action  to  set  aside 
conveyances  of  real  property  as 
fraudulent,  where  it  appears  that 
the  buildings  and  improvements  on 
the  property  are  properly  kept  and 
cared  for  by  the  defendant,  and  that 
he  is  solvent  and  capable  of  respond- 
ing for  all  rents  or  profits  received 
during  the  pendency  of  the  action, — 
especially  if  he  offers  to  enter  into 
a  bond  to  the  plaintiffs  in  such  sum, 
with  such  conditions,  and  with  such 
sureties  as  the  court  may  designate, 
to  account  for  such  rents  and  profits. 
Spokane  v.  Amsterdamsch  Trustees 
Eantoor,  18  Wash.  81. 

A  receiver  appointed  in  a  credit- 
ors' action  to  take  charge  of  prop- 
erty adjudged  to  have  been  fraudu- 
lently mortgaged  by  the  debtor  to  a 
corporation  is  entitled,  as  against 
the  bona  fide  holders  of  bonds  of  the 
corporation  secured  by  the  mortgage, 
whose  rights  are  not  affected  by  the 
decree,  to  interest  upon  the  amount 
paid  by  him  to  take  up  bonds  which 
had  been  pledged  as  collateral  secur- 
ity for  the  debts  of  the  corporation 
and  of  the  debtor  in  adjusting  the 
rights  of  the  respective  parties  in  the 
proceeds  of  the  mortgage.  Badger 
V.  Sutton,  30  App.  Div.  294. 

The  appointment  of  a  receiver  of 
the  property  of  a  debtor  will  not  be 
set  aside  where  the  debtor  does  not 
deny  the  allegations  in  the  bill  charg- 
ing that  specified  deeds  of  trust  were 


6 


made  with  the  intent  to  hinder,  de- 
lay, and  defraud  creditors  and  secure 
a  fictitious  debt,  and  the  trustee  does 
not  deny  that  he  knew  of  such  fraud- 
ulent intent.  Lyle  v.  Commercial 
Nat.  Bank,  93  Va.  487. 

The  apjjointment  of  a  receiver  in 
an  action  by  judgment  creditors  to 
subject  to  the  lien  of  their  judgments 
personalty  in  the  possession  of  the 
debtor  and  claimed  to  have  been 
fraudulently  mortgaged  will  not  be 
denied  on  the  ground  that  the  plain- 
tiffs have  an  adequate  remedy  at  law 
by  levy  and  sale  under  execution, 
since  such  remedy  is  not  exclusive. 
Eirsch  v.  Israel,  106  Iowa,  498. 

A  suit  in  equity  by  judgment  cred- 
itors for  the  purpose  of  subjecting 
personalty  in  the  possession  of  the 
debtor,  and  claimed  to  have  been 
fraudulently  mortgaged,  to  the  pay- 
ment of  the  plaintiff's  judgments, 
affords  a  sufficient  basis  for  the  ap- 
pointment of  a  receiver.     Ihid. 

A  receiver  will  be  appointed  under 
Ohio  Rev.  Stat.  §§  5483,  5484,  where 
the  debtor  has  fraudulently  or  sus- 
piciously transferred  his  property  to 
others  who  hold  and  claim  to  own 
it,  if  there  is  a  strong  possibilty  that 
if  a  receiver  were  appointed  some  of 
the  property  could  be  recovered  and 
its  proceeds  applied  on  the  creditor's 
judgment.  Hayes  v.  Moore,  5  Ohio 
N.  P.  220. 

A  receiver  is  properly  appointed 
to  take  charge  of  property  trans- 
ferred by  a  failing  debtor  in  fraud 
of  creditors.  Bomar  v.  Means,  53 
S.  C.  232. 

Property  in  the  hands  of  a  receiver 
appointed  in  an  action  by  judgment 
creditors  in  aid  of  their  executions 
to  set  aside  certain  transfers  by  the 
debtor  as  fraudulent,  at  the  time  of 
his  discharge,  pursuant  to  a  decree 
adjudging  that  the  only  relief  plain- 
tiffs could  obtain  was  the  removal 
of  the  transfers  as  an  obstruction  to 
the  enforcement  of  their  executions, 
and  that  the  appointment  of  a  receiv- 
er was  improper,  should  be  returned 
to  the  transferees,  and  not  turned 
over  to  the  sheriff  holding  the  execu- 
tions. Home  Bank  v.  ,/.  B.  Brewster 
d  Co.  33  App.  Div.  330. 

A  receiver  is  properly  appointed 
pending  a  creditors'  bill,  where  the 

81 


§  149 


RECEIVERSHIPS— SUPPLEMENT. 


property,  both  tangible  and  intangi- 
ble, is  oif  a  kind  easily  put  out  of 
reach,  and  the  amount  involved  is 
very  considerable, — especially  where 
complainant  tenders  a  bond  condi- 
tioned for  the  payment  of  all  dam- 
ages that  may  result  from  the  ap- 
pointment. E.  A.  Moore  Furniture 
Co.  V.  I'russing,  71  ill.  App.  666. 

Where  a  lien  is  acquired  on  the 
filing  of  a  creditors'  bill,  a  receiver 


is  properly  appointed  upon  an  aver- 
ment that  the  appointment  is  neces- 
sary to  preserve  and  ellVctuate  the 
lien,  by  reason  of  the  insolvency  of 
the  debtor  and  the  disposition  of  the 
property  by  the  defendants.  Heard 
v.  Murray,  93  Ala.  127 ;  cf.  Moritz 
V.  Miller,  87  Ala.  331;  Thompson  v. 
Tower  Mfg.  Co.  87  Ala.  733;  Sims 
V.  Adams,  78  Ala.  395. 


Page  249,  sec.  149. — Jurisdiction  in  matters  of  assignment. 


A  receiver  is  properly  appointed 
of  an  assigned  estate,  where  the  as- 
sets have  been  transferred  to  a  per- 
son who  has  bought  up  claims 
against  the  estate,  and  is  to  transfer 
the  undisposed-of  portion  of  the  es- 
tate, after  reimbursing  himself  in  an 
agreed  sum,  to  ^Jersons  named,  and 
the  insolvency  proceedings  have  been 
discontinued.  Warren  v.  Howe  (111. 
App.)  1  Chic.  L.  J.  Wkly.  677. 

A  receiver  may  avoid  an  assign- 
ment of  goods  by  way  of  mortgage, 
made  by  a  corporation,  on  the 
ground  that  it  was  not  recorded 
within  the  time  required  by  law  in 
order  to  make  it  valid  "as  against 
any  other  person  than  the  parties." 
Franklin  Nat.  Bank  v.  Whitehead, 
149  Ind.  560,  39  L.  R.  A.  725. 

General  creditors  of  an  assignor 
for  creditors  may,  even  after  final 
judgment,  intervene  in  attachment 
proceedings  instituted  before  the  ex- 
piration of  the  twenty  days  limited 
for  filing  an  inventory,  and  pray  for 
a  distribution  j^ro  rata  of  the  pro- 
ceeds of  the  property  which  has  been 
sold  under  the  direction  of  the  court, 
among  all  the  assignor's  creditors, 
and  for  the  appointment  of  a  receiver 
to  administer  the  trust,  where  they 
claim  that  the  assignment  is  invalid, 
or  that  the  assigned  property  became 
a  trust  fund  because  of  a  preference 
in  the  assignment,  rendering  the 
same  invalid  under  the  Oklahoma 
statute.  Hockaday  v,  Drye,  7  Okla. 
288. 

When  it  appears  that  an  assign- 
ment will  be  set  aside  on  final  judg- 
ment a  receiver  will  be  appointed. 
People's  Bank  v.  Faucher,  21  N.  Y. 
Supp.  545. 
82 


On  a  bill  filed  for  the  appointment 
of  a  receiver  and  an  injunction  and 
to  set  aside  an  assignment  as  void  as 
to  creditors,  when  no  actual  fraud 
is  shown  and  the  solvency  of  the  as- 
signees is  not  questioned,  it  is  proper 
for  the  court  to  allow  the  assignees 
to  dispose  of  the  property  and  collect 
the  debts  and  hold  the  proceeds  sub- 
ject to  the  decree  of  court,  though 
the  disposition  of  the  proceeds  under 
the  assignment  is  restrained.  Spring 
V.  Strauss,  3  Bosw.  607. 

The  Illinois  assignment  act  does 
not  deprive  courts  of  equity  of  juris- 
diction in  creditors'  bills  to  set  aside 
a  fraudulent  assignment  or  a  pref- 
erence made  prior  to  an  assignment, 
and  for  the  appointment  of  a  re- 
ceiver. Strong  v.  Goldman,  8  Biss. 
552. 

A  receiver  of  the  profits  of  an  of- 
fice assigned  for  creditors  will  be  ap- 
pointed pending  a  contest  of  the 
validity  of  the  assignment.  Palmer 
v.  Vaughan,  3  Swanst.  173. 

An  order  appointing  a  receiver 
pendente  lite  in  a  proceeding  under 
3  How.  (Mich.)  Ann.  Stat.  §  8749o, 
providing  "for  the  appointment  of  a 
receiver  at  the  instance  of  persons 
having  preferred  claims  under  a  vol- 
untary assignment,  is  improvident 
if  not  an  absolute  nullity.  Hall  v. 
Wayne  Circuit  Judge,  111  Mich. 
395. 

A  charge  that  an  assignee  for 
the  benefit  of  creditors  declines  to 
account  to  them  from  time  to  time 
concerning  the  condition  of  the  trust 
will  not  justify  his  removal  and  the 
appointment  of  a  receiver,  in  the  ab- 
sence of  proof  of  any  misfeasance  or 
misappropriation  of  property,  on  his 


CREDITORS'  BILLS,  ETC. 


§  150 


part,  and  where  the  complaint  is  evi- 
dently inspired  by  the  impatience  of 
creditors.  Dozier  v.  Logan,  101  Ga. 
173. 

An  assignee  for  the  benefit  of  cred- 
itors will  not  be  removed  and  a  re- 
ceiver appointed  in  his  stead, uponan 
allegation  that  one  of  the  two  sure- 
ties upon  the  assignee's  bond  is  in- 
solvent.    Ibid. 

Misconduct  on  the  part  of  an  as- 
signee for  creditors  is  ground  for  ap- 
pointment. Goldsmith  v.  Fech- 
heimer,  16  Ky.  L.  Rep.  432. 

A  receiver  will  be  refused  where 
the  assignee  under  the  assignment 


has  ample  power,  and  is  not  charged 
with  misconduct.  Hyde  v.  Weitzner, 
45  Minn.  35. 

In  the  absence  of  established 
grounds  for  equitable  interference, 
the  court  will  not,  even  with  the  con- 
sent of  the  assignor  and  the  assignee, 
place  an  assigned  estate  in  the 
hands  of  a  receiver.  Penzel  Grocer 
Co.  V.  Williams,  53  Ark.  81. 

An  assignee  kept  out  of  an  estate 
owing  to  an  old  commission  in  bank- 
ruptcy is  entitled  to  a  receiver  and 
the  rents  and  profits,  while  kept  out 
of  the  use  thereof.  Eollis  v.  Bry- 
ant, 12  Sim.  492. 


Page  251,  sec.  150. — Supplementary  proceedings. 


Pending  attachment  proceedings 
will  not  prevent  the  appointment  of 
a  receiver  in  supplementary  proceed- 
ings. Hanson  v.  Tripler,  3  Sandf. 
733. 

Irregularity  in  the  appointment 
of  a  receiver  is  no  ground  for  object- 
ing to  an  examination  concerning 
property  and  effects.  Howard  v. 
Palmer,  Walk.  Ch.   (Mich.)   391. 

The  judge  who  makes  the  order 
for  an  examination  of  the  debtor  is 
the  one  to  appoint  a  receiver.  Smith 
V.  Johnson,  7  How.  Pr.  39. 

A  receiver  may  be  appointed  in 
proceedings  supplementary  to  execu- 
tion, on  the  examination  of  a  third 
party  indebted  to  the  judgment  debt- 
or. De  Vivier  v.  Smith,  6  N.  Y. 
Civ.  Proc.  Rep.  394,  1  How.  Pr. 
N.  S.  48. 

Under  supplementary  proceedings 
in  New  Jersey,  after  an  order  for  ex- 
amination is  served,  a  receiver  may 
be  appointed,  though  the  debtor  him- 
self has  not  been  examined.  Cotton 
V.  Bigeloiv,  41  N.  J.  L.  266. 

Under  the  New  York  act  of  1874 
there  was  no  power  to  appoint  a  re- 
ceiver except  when  an  order  for  ex- 
amination had  been  made;  and  in  a 
case  in  which  a  receiver  was  ap- 
pointed before  the  order  was  made, 
the  appointment  was  held  void. 
Holbrook  v.  Oipler,  8  Jones  &  S.  33, 
49  How.  Pr.  289. 

An  order  for  the  examination  of 
a  third  party  in  supplementary  pro- 


ceedings will  be  set  aside  where  it 
appears  that  a  receiver  has  been  ap- 
pointed in  sequestration  proceedings 
against  the  judgment  debtor,  who  is 
entitled  to  all  the  personalty  belong- 
ing to  such  debtor.  BucJci  v.  Bucki, 
26  Misc.  69. 

An  order  appointing  a  receiver  in 
supplementary  proceedings,  and  di- 
recting him  to  bring  suit  for  a  bal- 
ance due  on  a  specified  claim  in  fa- 
vor of  the  judgment  debtor  from  a 
third  person,  is  not  objectionable  on 
the  ground  that  the  balance  due  on 
such  claim  has  been  extinguished  by 
an  agreement  between  the  parties,  as 
such  fact,  if  it  exists,  may  be  shown 
on  the  trial.  Globe  Phosphate  Co. 
V.  Pinson,  52  S.  C.  185. 

A  receiver  in  supplemental  pro- 
ceedings is  only  appointed  to  pre- 
serve property.  Rodman  v.  Harvey, 
102  N.  C.  1. 

In  supplementary  proceeding  a  re- 
ceiver cannot  be  appointed  of  partic- 
ular debts.  Andrews  v.  Glenville 
Woolen  Co.  11  Abb.  Pr.  N.  S.  78. 

In  supplemental  proceedings  un- 
der the  statute,  against  an  insolvent 
corporation,  there  is  no  preference 
obtained.  Hammond  v.  Hudson 
River  Iron  &  Mach.  Co.  11  How.  Pr. 
29, 

A  receiver  in  supplementary  pro- 
ceedings may  maintain  an  action  to 
set  aside  a  transfer  of  property  by 
the  judgment  debtor  with  intent  to 
give  a  preference  to  certain  credit- 

83 


150 


RECEIVERSHIPS— SUPPLEMENT. 


ors,  under  N.  Y.  Laws  1858,  chap. 
314,  authorizing  the  receiver  of  the 
property  of  an  insolvent  individual 
to  set  aside  such  a  transfer.  Stiefel 
V.  Berlin,  28  App.  Div.  103. 

A  receiver  appointed  in  proceed- 
ings supplementary  to  execution  may 
maintain  an  action  to  set  aside  a 
transfer  of  property  by  an  insolvent 
limited  partnership  as  preferential. 
Stiefel  V.  Berlin,  20  Misc.  194. 

The  authority  conferred  upon  a  re- 
ceiver by  N.  Y.  Laws  1858,  chap.  314, 
as  amended  by  N.  Y.  Laws  1894, 
chap.  740,  to  follow  specific  property 
transferred  in  fraud  of  creditors,  and 
recover  it  or  its  value,  does  not  en- 
title a  receiver  in  supplementary 
proceedings  to  sue  at  law  to  recover 
damages  for  a  fraudulent  conspiracy 
to  prevent  the  collection  of  the  debt. 
Ward  V.  Petrie,  157  N.  Y.  301. 

An  appointment  in  supplementary 
proceedings  vests  in  the  receiver  all 
the  property,  real  and  personal,  and 
rights  of  action  of  the  debtor.  Re 
Wilds,  6  Abb.  N.  C.  307. 

A  judgment  debtor  who  makes 
payments  upon  a  mortgage  on  land 
belonging  to  his  wife  has  an  equi- 
table right  to  a  lien  upon  the  land 
for  the  money,  and  such  lien  is  in 
substance  and  effect  personalty  to 
which  a  receiver  in  supplementary 
proceedings  may  make  claim.  Walsh 
v.  Rosso  (N.  J.  Eq.)  41  Atl.  669. 

He  has  no  claim  upon  property  ac- 
quired subsequent  to  the  date  of  the 
order  of  appointment.  Thorn  v.  Fel- 
lows, 5  N.  Y.  Week.  Dig.  473. 

The  debtor  may  be  required  to  pay 
to  the  receiver  a  balance  of  a  bank 
account  standing  in  the  name  of  his 
wife,  which  is  managed  as  his  own 
under  power  of  attorney  from  her. 
See  N.  Y.  Code  Civ.  Proc.  §  2447. 
Weld  V.  Sage,  34  App.  Div.  471. 

On  motion  for  the  appointment 
the  court  has  no  right  to  adjudicate 
the  receiver's  right  to  money.  Manice 
V.  Smith,  5  N.  Y.  Week.  Dig.  255. 

The   receiver   represents   all   cred- 
itors.    Bostwick  V.  Beizer,  10  Abb. 
Pr.  197. 
84 


In  a  proceeding  supplementary  to 
execution  under  the  New  York  Code 
a  receiver  may  be  appointed  al- 
though the  only  property  discovered 
is  subject  to  execution.  Eeroy  v. 
Oihson,  10  Bosw.  591. 

In  supplementary  proceedings  the 
duties  of  the  receiver  end  when  the 
judgment  is  paid  or  fully  secured. 
Gifford  V.  Rising,  59  Hun,  42. 

In  supplementary  proceedings  the 
judge  cannot  order  property  of  the 
debtor  to  be  delivered  to  the  cred- 
itor on  his  giving  the  debtor  a  re- 
ceipt. Diekinson  v.  Onderdonk,  18 
Hun,  479. 

He  may  be  required  to  give  secur- 
ity for  costs.  Welch  v.  Bogert,  3  N. 
Y.  Week.  Dig.  402. 

A  receiver  in  supplementary  pro- 
ceedings is  not  authorized  to  main- 
tain an  action  at  law  to  recover  dam- 
ages for  a  fraudulent  conspiracy  to 
prevent  the  collection  of  the  debt, 
carried  into  effect  prior  to  the  com- 
mencement of  the  proceedings  in 
which  the  receiver  was  appointed. 
Ward  v.  Petrie,  157  N.  Y.  301. 

A  judgment  debtor  is  entitled  to 
notice  of  the  application  for  appoint- 
ment. Clark  V.  Savage,  5  N.  Y. 
Week.  Dig.  193  ;  Vandeburgh  v.  Gay- 
lord,  7  N.  Y.  Week.  Dig.  136. 

A  receiver  appointed  for  a  corpo- 
ration in  proceedings  supplementary 
to  execution,  who  has  taken  posses- 
sion of  its  assets,  including  a  policy 
of  insurance  issued  by  an  employers' 
accident  liability  insurance  com- 
pany, is  a  necessary  party  to  an  ac- 
tion against  the  corporation  and  the 
insurer  by  an  employee  of  the  former 
to  recover  for  negligent  injuries. 
Moore  v.  Los  Angeles  Iron  d  8.  Co. 
89  Fed.  Rep.  73. 

A  receiver  may  avoid  an  assign- 
ment of  a  chose  in  action.  Coleman 
V.  Roft,  45  N.  J.  L.  7. 

But  has  no  power  to  take  forcible 
possession  of  property  in  the  hands 
of  a  third  party.  Dewey  v.  Finn, 
18  N.  Y.  Week.  Dig.  558. 


RECEIVERSHIP  IN  FORECLOSURE   OF  MORTGAGES.      §  170 

Page  266,  sec.  170. — Eeceivership  in  foreclosure  of  mortgages; 

generally. 


When  the  right  to  retain  posses- 
sion is  in  the  mortgagor  and  also  the 
right  to  collect  the  revenues  until 
default,  a  receiver  appointed  in  a  suit 
to  foreclose  the  mortgage  has  no 
right  to  earnings  prior  to  the  filing 
of  the  bill,  that  being  the  first  de- 
mand though  the  money  was  not  paid 
till  afterwards.  Hook  v.  Bosworth, 
24  U.  S.  App.  341,  64  Fed.  Rep.  443, 
12  C.  C.  A.  208. 

A  purchaser  at  foreclosure  sale  is 
entitled  to  a  receiver  of  the  rents. 
Americati  Freehold  Land  Mortg.  Co. 
V.  Turner,  95  Ala.  272. 

Rents  paid  in  advance  to  a  pur- 
chaser of  mortgaged  premises  in  the 
absence  of  collusion  sustained.  Law- 
rence V.  Conlon,  26  Misc.  44. 

A  mortgagee  who  bids  in  the  prem- 
ises at  foreclosure  sale  for  less  than 
the  amount  due  him  and  obtains  a 
deficiency  decree  for  the  balance  still 
has,  upon  a  proper  showing,  the  equi- 
table right  to  have  the  rents  of  the 
premises  accruing  during  the  re- 
demption period  applied  in  satisfac- 
tion of  the  deficiency,  and  the  ap- 
pointment of  a  receiver  is  the  proper 
procedure  to  secure  him  such  right. 
Boru-ff  v.  Einkley,  68  111.  App.  274. 

Discharge  of  mortgage  hy  release  of 
security. 

Whether  a  mortgage  is  discharged 
as  to  subsequent  mortgagees  by  the 
prior  mortgagee's  voluntarily  releas- 
ing part  of  his  security  without  re- 
ducing the  amount  of  his  mortgage 
will  not  be  determined  on  a  motion 
for  the  appointment  of  a  receiver  of 
the  rents  and  profits,  pending  a  pro- 
ceeding to  foreclose  the  prior  mort- 
gage, but  will  be  left  for  determina- 
tion at  the  trial.  Ross  v.  Vernam, 
6  App.  Div.  246. 

When  foreclosure  restrained. 

The  court  appointing  a  receiver  of 
the  property  of  a  corporation  may 
properly  refuse  to  permit  a  foreclos- 
ure sale  under  an  attachment  levied 
before  the  receiver  was  appointed, 
where  there  is  a  mortgage  lien  on 


the  attached  property  prior  to  the 
attachment.  Southwestern  Invest- 
ment Co.  V.  Crawford,  16  Tex.  Civ. 
App.  475. 

When  receivership  extended. 
Where  a  creditor  pending  a  fore- 
closure secures  the  appointment  of  a 
receiver  the  receivership  will  be  ex- 
tended to  the  foreclosure  case,  where 
the  judgment  on  which  the  receiver 
was  appointed  was  obtained  pendente 
lite.  Trye  v.  Aldborough,  1  Ir.  Ch. 
Rep.  666. 

Effect  of  foreclosure. 
A  mortgagee  whose  debt  is  due  and 
defectively  secured  may,  by  filing  a 
bill  to  foreclose  and  procuring  a  re- 
ceiver, obtain  an  equitable  lien  on 
the  unpaid  rents.  Lofsky  v.  Maujer, 
3  Sandf.  Ch.  76. 

Functions  of  receiver  in. 
The  ordinary  duties  of  a  receiver 
in  foreclosure  are  to  collect  rents  and 
preserve  the  property  from  loss  and 
decay.  But  they  are  more  extensive 
in  railway  foreclosures.  TSlew  Jer- 
sey Midland  R.  Co.  v.  Wortendyke, 
27  N.  J.  Eq.  658,  662. 

Rents  in  arrear;  who  entitled  to. 
A  receiver  cannot  in  a  foreclosure 
reach  rents  accrued  and  in  arrears 
prior  to  the  commencement  of  suit. 
Mutual  L.  Ins.  Co.  v.  Belknap,  19 
Abb.  N.  C.  345. 

Excess  on  foreclosure. 
A  receiver  is  entitled  to  the  excess 
on  foreclosure  as  against  a  creditor 
who  obtains  judgment  after  the  re- 
ceiver's possession.  Jermain  v.  Hen- 
dricks, 100  N.  Y.  279. 

Bond  necessary. 
The  appointment  of  a  receiver  in 
an  action  to  foreclose  a  mortgage  by 
an  order  authorizing  him  to  enter 
on  the  discharge  of  his  duties  "upon 
giving  bond,"  instead  of  requiring 
the  bond  to  be  given  before  the  ap- 
pointment as  required  by  Ala.  act 
February  18,  1895,  is  invalid.  Drey- 
spring  v.  Locb,  113  Ala.  263. 

85 


§  172  RECEIVERSHIPS— SUPPLEMENT. 

Page  267,  sec.  172. — Foreclosure;  when  receiver  appointed. 


A  receiver  is  properly  appointed 
during  the  pendency  of  a  foreclosure 
suit  under  a  contract  for  its  pur- 
chase, where  the  purchaser  seeks  to 
avoid  the  payment  of  the  purchase 
price,  and  the  contract  provides  that 
on  the  failure  of  the  purchaser  to 
pay  any  instalment  when  due  the  ven- 
dor may  re-enter  and  repossess  the 
premises.  Belding  v.  Meloche,  113 
Mich.  223,  Distinguishing  Wagar 
V.  Stone,  36  Mich.  3t)l). 

A  receiver  may  properly  be  ap- 
pointed in  a  suit  to  foreclose  a  title 
bond.  Caudle  v.  Moran,  119  N.  C. 
432. 

A  receiver  is  properly  appointed 
in  an  action  to  foreclose  a  chattel 
mortgage,  on  the  ground  that  it  will 
prevent  a  multiplicity  of  suits. 
Wiedemann  v.  Sann  (N.  J.  Eq.)  31 
Atl.  211. 


The  appointment  of  a  receiver  in 
an  action  to  foreclose  a  trust  deed 
securing  a  debt  is  justified  under  the 
same  conditions  in  which  it  would  be 
authorized  if  the  action  was  for  the 
foreclosure  of  a  mortgage.  Pearson 
V.  Kendrick,  74  Miss.  235. 

When  an  assignment  is  subject  to 
lis  pendens  a  petition  for  a  receiver 
should  be  granted.  Arnold  v.  Provi- 
dence Lumber  Co.  (R.  I.)  1  New 
Eng.  Rep.  44. 

An  order  appointing  a  receiver  in 
mortgage  foreclosure  will  not  be  va- 
cated at  the  instance  of  a  trustee  in 
insolvency  of  the  mortgagor's  prop- 
erty, or  save  at  the  instance  of  a 
party  to  the  cause.  Central  Trust 
Co.  V.  Worcester  Cycle  Mfg.  Co.  86 
Fed.  Rep.  35. 


Page  270. — (a)    Where  rents  cmd  profits  jpledged. 


A  receiver  of  the  rents  and  profits 
will  not  be  appointed  pendente  lite 
in  an  action  to  foreclose  a  mortgage 
containing  a  clause  providing  for 
such  a  remedy,  in  the  absence  of  any 
allegation  as  to  the  insufficiency  of 
the  security.  Jarvis  v.  McQuaide, 
24  Misc.   17;    Morrison  v.  Buckner, 


Hempst.   442;    Stetson  v.   Northern 
Investment  Co.  101  Iowa,  435. 

A  receiver  is  entitled  to  rents  to 
the  end  of  the  redemption  period, 
wuere  the  mortgage  pledges  them  if 
there  is  a  deficiency.  First  Nat. 
Bank  v.  Illinois  Steel  Co.  174  111. 
140,  Affirming  72  111.  App.  040. 


Page  271. — (b)    Where  security  is  inadequate. 


That  a  mortgagee  is  not  entitled  to 
possession  of  the  property  before 
foreclosure  will  not  prevent  the  ap- 
pointment of  a  receiver  upon  his  pe- 
tition, if  he  alleges  insolvency  of  the 
mortgagor,  insufficiency  of  the  prop- 
erty to  pay  the  debt,  and  a  deteri- 
oration of  the  property  in  the  mort- 
gagor's hands.  American  Nat.  Bank 
V.  Northwestern  Mut.  L.  Ins.  Co.  89 
Fed.  Rep.  610,  32  C.  C.  A.  275. 

Where  plaintiff  shows  a  prima 
facie  right  and  the  security  is  scant, 
a  receiver  pendente  lite  will  be  ap- 
pointed. Phillips  V.  Eiland,  52  Miss. 
721 ;  Kelly  v.  Butler,  1  Ir.  Eq.  Rep. 


435 :  Marshall  &  I.  Bank  v.  Cady 
(Minn.)  77  N.  W.  831. 

Plaintiff  in  an  action  to  foreclose 
a  mortgage  for  unpaid  interest  is  en- 
titled to  the  appointment  of  a  re- 
ceiver, although  the  principal  is  not 
due,  where  the  mortgage  is  inade- 
quate security  for  the  principal  and 
interest,  and  the  parties  personally 
liable  upon  the  bond  are  not  respon- 
sible. Veerhoff  v.  Miller,  30  App. 
Div.  355. 

The  court  is  authorized  by  Cal. 
Code  Civ.  Proc.  §  564.  to  appoint  a 
receiver  in  a  foreclosure  action  to 
take  and  hold  the  rents  and  profits 


RECEIVERSHIP  IN  FORECLOSURE   OF  MORTGAGES.    §  172 


to  secure  the  debts,  where  the  secur- 
ity is  insufficient.  Scott  v.  Hotch- 
Mss,  115  Cal.  89. 

The  mortgagor's  assignment  for 
creditors  does  not  defeat  the  mort- 
gagee's right  under  the  Indiana  stat- 
utes to  the  appointment  of  a  receiv- 
er pending  an  action  to  foreclose  the 
mortgage,  if  the  security  is  inade- 
quate. Sweet  &  C.  Co.  V.  Union  Nat. 
Bank,  149  Ind.  305. 

A  receiver  may  be  appointed  on  re- 
fusal to  apply  rents  on  interests  due 
on  the  mortgage  where  there  is  scant 
security.  Stockman  v.  Wallis,  30  N. 
J.  Eq.  449. 

A  receiver  will  be  appointed,  un- 
der Mansf.  (Ark.)  Dig.  §  5289,  in  an 
action  to  foreclose  an  equitable  mort- 
gage, where  the  mortgagor  and  his 
grantee  are  insolvent  and  the  secur- 
ity is  scant.  Weis  v.  Neel  (Ark.) 
14  S.  W.  1097;  Bristow  v.  Home 
Bldg.  Co.  91  Va.  18. 

In  foreclosure  a  receiver  will  be 
appointed  where  there  is  inadequate 
security,  imminent  danger  of  waste, 
removal,  or  destruction,  or  where 
rents,  etc.,  have  been  expressly 
pledged  for  the  payment  of  the  debt. 
Morrison  v.  Buckner,  Hempst.  442. 

A  petition  subsequent  to  a  per- 
sonal judgment  and  decree  of  fore- 
closure of  a  mortgage  for  the  ap- 
pointment of  a  receiver  of  the  rents 
and  profits  of  the  land  is  sufficient 
under  the  Indiana  statute,  where  it 
appears  therefrom  that  the  property 
is  inadequate  to  secure  the  debt,  that 
the  debtor  is  insolvent,  that  the 
mortgagors  do  not  occupy  the  prop- 
erty, and  that  the  security  is  in  peril 
from  lapse  of  insurance  and  the  ma- 
turity of  taxes.  Harris  v.  United 
States  Sav.  Fund  &  Invest.  Co.  146 
Ind.  265. 

A  receiver  will  be  appointed  where 
the  land  is  deteriorating.  Bailey 
V.  Bailey,  10  Ky.  L.  Rep.  793. 

A  receiver  of  the  property  of  a 
foreign  corporation  is  properly  ap- 
pointed in  an  action  to  foreclose  the 
same,  where  it  appears  that  the  rents 
of  the  mortgaged  premises  are 
pledged  for  the  payment  of  the  debt, 
that  they  are  not  being  applied,  and 
tliat  the  corporation  is  insolvent  and 
the  pjroperty  insufficient  to  pay  the 
mortgages   and   overdue   taxes,   and 


other  facts  appear  showing  that  the 
rents  are  in  danger  of  being  lost  to 
the  mortgagee.  Stetson  v.  Northern 
Investment  Co.  101  Iowa,  435. 

A  receiver  should  be  appointed  aft- 
er a  sale  under  foreclosure  for  less 
than  the  amount  of  the  decree,  where 
the  mortgage  provides  for  the  ap- 
pointment of  a  receiver  either  before 
or  after  a  sale  leaving  a  deficiency, 
and  there  is  no  party  against  whom 
a  decree  for  the  deficiency  can  be 
made.  Wright  v.  Kreft  (111.  App.) 
2  Chic.  L.  J.  Wkly.  197. 

A  receiver  may  be  appointed  of 
the  rents  and  profits  of  mortgaged 
premises,  where  a  deficiency  is  ascer- 
tained in  the  foreclosure  proceedings, 
a  decree  entered  for  it,  and  execution 
returned  unsatisfied,  and  the  mort- 
gage gives  authority  to  collect  and 
receive  all  rents,  issues,  and  profits. 
Fountain  v.   Wa^/ier, 66 111. App. 529. 

The  provision  of  2  Hill's  (Wash.) 
Code,  §  326,  that  when  mortgaged 
property  is  insufiicient  to  discharge 
the  debt  a  receiver  of  the  rents  and 
profits  may  be  appointed  pending 
foreclosure,  was  abrogated  by  Wash. 
Laws  1869,  p.  130,  §  496,  directing 
that  a  mortgagee  shall  not  recover 
possession  of  the  property  without 
a  foreclosure  and  sale  according  to 
law.  Norfor  v.  Bushy,  19  Wash.  450. 

A  receiver  will  be  appointed  when 
plaintiff  is  entitled  to  the  rents,  and 
the  party  in  possession  is  insolvent, 
and  security  scant.  Collins  v.  Rio- 
hart,  14  Bush,  621. 

A  receiver  of  the  rents  and  profits 
of  mortgaged  lands  pending  a  fore- 
closure suit  will  not  be  appointed 
where  a  stranger  is  in  possession  of 
the  land,  claiming  adversely,  unless 
he  is  insolvent  and  in  consequence 
thereof  there  is  imminent  danger  of 
tlie  loss  of  the  rents  and  profits. 
Warren  v.  Pitts,  114  Ala.  65. 

A  court  of  equity  has  power  to  ap- 
point a  receiver  to  collect  the  rents 
and  profits  of  the  mortgaged  prem- 
ises and  apply  them  upon  the  indebt- 
edness, although  no  provision  is 
made  therefor  in  the  mortgage,  when 
the  premises  are  an  insufficient  se- 
curity and  the  mortgagor  is  insol- 
vent. First  Nat.  Bank  v.  Illinois 
Steel  Co.  174  111.  140,  Affirming  72 
111.  App.  640. 

87 


§  173  RECEIVERSHIPS— SUPPLEMENT. 

Page  276. — (d)  Nonpayment  of  taxes. 


An  agreement  that  on  default 
in  the  payment  of  taxes  and  insur- 
ance tlie  mortgagee  may  declare  the 
indebtedness  due,  though  not  so  by 
the   tenure   of    the    notes,    and    for 


the  appointment  of  a  receiver,  may 
be  entered  into^  and  the  court  will 
enforce  the  provisions.  Is^iccolls  v. 
Peninsular  Stove  Co.  48  111.  App.  317. 


Page  277. — (f)  Special  equitable  grounds. 


A  receiver  ought  not  to  be  ap- 
pointed in  an  action  to  foreclose  a 
mortgage,  unless  it  clearly  appears 
that  the  equities  of  the  case  demand 
it,  especially  where  there  is  an  undi- 
vided interest  in  the  land,  not  owned 
by  the  mortgagors,  and  not  covered 
by  the  mortgage.  Holmes  v.  Stix, 
20  Ky.  L.  Rep.  593. 

A  receiver  will  be  appointed  where 
a  mortgage  upon  the  corporate  prop- 


erty is  being  foreclosed,  judgments 
have  been  recovered  against  it,  un- 
der which  levies  have  been  made, 
when  its  management  is  in  the 
hands  of  a  minority  of  its  directors, 
its  business  receipts  are  unaccounted 
for,  and  no  effort  is  being  made  to 
remove  the  company  from  its  peril- 
ous condition.  Ft.  Wayne  Electric 
Corp.  V.  Franklin  Electric  Light  Co. 
57  N.  J.  Eq.  7. 


Page  278. — (j)    Where  indebtecbiess  not  due,  hut  interest  due. 


A  receiver  and  manager  of  the 
business  of  a  corporation  Avill  be  ap- 
pointed in  a  debenture  holder's  ac- 
tion where  a  winding-up  petition  has 
been  presented  but  no  order  for  wind- 
ing up  made,  and  there  is  a  possibil- 
ity that  the  property  covered  by  the 
debentures  will  have  to  be  sold  in 
the  near  future,  although  nothing 
has  become  actually  due  upon  the 
debentures.    Re  Victoria  Steamboats 


[1897]  1  Ch.  158,  GO  L.  J.  Ch.  K  S. 
21,  75  L.  T.  N.  S.  374. 

Where  the  suit  is  on  a  judgment 
on  a  bond,  the  interest  only  being 
due,  a  receiver  should  be  appointed 
with  reference  to  the  interest  only. 
Ryerson  v.  Minton,  3  Edw.  Ch.  382. 

A  receiver  may  be  appointed  on 
the  admission  of  a  debtor  that  inter- 
est is  due  and  unpaid.  Page  v. 
Wellesley,  1  Hogan,  179. 


Page  278,  sec.  173. — When  not  appointed. 


On  the  application  for  the  ap- 
pointment of  receivers  in  a  mort- 
gage foreclosure  the  court  should  not 
appoint  receivers  over  other  com- 
panies not  parties  to  the  mortgage. 
Book  v.  Bosicorth,  24  U.  S.  App. 
341,  64  Fed.  Rep.  443,  12  C.  C.  A. 
208. 

An  application  for  the  appoint- 
ment of  a  receiver  pending  proceed- 
ings to  foreclose  a  mortgage  is  prop- 
erly refused  under  2  How.  (Mich.) 
Anno.  Stat.  §  7847.  Fifth  Nat. 
Bank  v.  C.  P.  Kellogg  Co.  5  Det.  L. 
N.  251,  sub  nom.  Fifth  Nat.  Bank 
V.  Pierce,  75  X.  W.  1058. 

The  rule  in  England  formerly  was, 
88 


that  if  a  mortgagee  had  the  legal  es- 
tate a  receiver  would  not  be  ap- 
pointed, a  remedy  at  law  existing; 
but  this  rule  did  not  apply  when 
there  was  a  prior  mortgage.  Ack- 
latid  V.  Gravener,  31  Beav.  482. 

Where  legal  title  is  in  mortgagor. 

A  receiver  will  not  be  appointed 
in  foreclosure  proceedings  where  the 
estate  remains  in  the  mortgagor  un- 
til sale.     Guy  v.  Ide,  6  Cal.  99. 

Where  by  terms  of  mortgage  right 
not  given. 

A  stipulation  in  a  mortgage  for 
the  appointment  of  a  receiver  of  the 


RECEIVERSHIP  IN  FORECLOSURE  OF  MORTGAGES.     S  173 


rents  and  profits,  and  their  applica- 
tion to  payment  of  the  amount  due, 
in  case  a  bill  to  foreclose  the  mort- 
gage is  filed,  does  not  authorize  a 
court  of  equity  to  appoint  a  receiver 
under  the  Oregon  statute.  Couper 
V.  Shirley,  44  U.  S.  App.  586,  75  Fed. 
Rep.  168,  21  C.  C.  A.  2^6. 

A  clause  mortgaging  the  rents  and 
profits  does  not  require  the  court  to 
appoint  a  receiver  in  an  action  to 
foreclose  the  mortgage;  and  such  an 
application  will  be  denied  notwith- 
standing the  clause,  if  the  land  is  ad- 
equate security.  Brick  v.  Horn- 
lech,  19  Misc.  218. 

Where  mortgage  or  amount  due  is  in 
dispute. 

An  appointment  will  be  refused  in 
foreclosure  if  the  mortgage  is  im- 
peached. Leahy  v.  Arthur,  1  Ho- 
gan,  92. 

And  before  a  sale,  if  the  security 
is  ample.  Degener  v.  Stiles,  6  N.  Y. 
Supp.  474. 

And  so  when  the  validity  of  the 
mortgage  is  questioned.  Darcy  v. 
Blake,  1  Molloy,  247. 

In  an  action  to  set  aside  a  con- 
veyance absolute  in  form,  but 
claimed  to  be  a  trust  deed,  a  receiver 
of  the  rents  will  not  be  appointed. 
McCool  V.  McNa^nara,  19  Abb.  N.  C. 
344. 

Where    insolvency    and    inadequacy 
not  shoion. 

A  receiver  pending  an  action  to 
foreclose  a  mortgage  should  not  be 
appointed  upon  an  affidavit  of  plain- 
tiff's attorney  stating  that  he  is  in- 
formed by  plaintiff  that  it  is  ex- 
tremely doubtful  whether  the  prem- 
ises will  sell  for  sufficient  to  pay  the 
mortgage  debt,  where  defendant 
swears  positively  that  the  property 
is  worth  much  more  than  sufficient. 
Sickels  V.  Canary,  8  App.  Div.  308. 

The  appointment  of  a  receiver 
pending  foreclosure,  on  the  ground 
that  the  property  is  insufficient  to 
discharge  the  debt,  is  not  warranted 
where,  by  law,  the  mortgage  is  a 
mere  security,  since  under  the  guise 
of  rents  and  profits  it  deprives  the 
mortgagor  of  the  most  valuable  in- 
cidents of  possession  prior  to  a  de- 


cree of  foreclosure  and  sale.     Norfor 
v.  Busby,  19  Wash.  450. 

Where  mortgagee  in  possession. 

A  receiver  will  not  be  appointed 
where  the  mortgagee  is  in  possession 
and  there  is  no  dispute  as  to  the 
amount  due,  or  charge  of  waste  or  in- 
solvency or  conversion.  Schultz  v. 
Jcrrard  (N.  J.  Eq.)  2  Cent.  Rep. 
211. 

When  application  by  a  junior  mort- 
gagee. 

A  receiver  has  been  refused  on  ap- 
plication of  a  second  mortgagee. 
Fhipps  V.  Bishop  of  Bath,  2  Dick. 
608. 

When   mortgagee  not   before   court. 

A  receiver  will  be  refused  when  the 
mortgagee  is  not  before  the  court. 
Price  V.  Williams,  Coop.  Ch.  31. 

In  foreclosure    of    mechanic's    lien. 

A  receiver  will  not  be  appointed  in 
an  action  to  foreclose  a  mechanic's 
lien.  Meyer  v.  Seebald,  11  Abb.  Pr. 
N.  S.  326,  note. 

Not  appointed  on  final  decree  before 
appeal. 

The  appointment  of  a  receiver  was 
refused  in  foreclosure  on  final  de- 
cree before  appeal  and  an  application 
for  stay  of  preceedings.  Chadron 
Bkg.  Co.  V.  Mahoney,  43  Neb.  214. 

Not  appointed  merely  because  ten- 
ants are  numerous. 

The  fact  that  the  tenants  are 
numerous  is  no  ground  for  the  ap- 
pointment of  a  receiver  in  behalf  of 
a  mortgagee.  Sturch  v.  Young,  5 
Beav.  557. 

Where  property  leased  before  mort- 
gage executed. 

The  appointment  of  a  receiver  of  a 
railroad  during  the  pendency  of  an 
action  to  foreclose  a  mortgage  on  the 
railroad  property  is  properly  refused 
in  the  discretion  of  the  court,  where 
the  road  had  been  leased  before  the 
execution  of  the  mortgage.  Louis- 
ville &  N.  R.  Co.  V.  Eakin,  100  Ky. 
745. 

89 


176-180 


RECEIVERSHIPS— SUPPLEMENT. 


When  receivers    appointed    in    a7i- 
other  foreclosure. 

An  independent  suit  for  foreclos- 
ure of  a  mortgage  and  appointment 
of  receivers  of  the  property  of  a  rail- 
road company  cannot  be  maintained 
where  innnediate  possession  and  the 
displacement  of  receivers  appointed 
by  another  court,  or  their  appoint- 
ment as  receivers  in  the  new  suit,  is 
sought  without  leave  of  the  court  in 
the  original  case  to  file  a  separate 


bill.  American  Loan  &  T.  Co.  v. 
Central  Vermont  li.  Go.  8G  Fed.  Rep. 
390. 

When     mortgagor     in     bankruptcy. 

A  receiver  cannot  be  appointed  in 
an  action  to  foreclose  a  chattel 
mortgage,  where  the  mortgagor  has 
filed  a  petition  in  voluntary  bank- 
ruptcy in  the  United  States  district 
court.  Carpenter  v.  O'Connor,  IG 
Ohio  C.  C.  526. 


Page  295,  sec.  176. — Over  what  appointed. 


The  receivership  need  not  extend 
to  the  entire  property  covered  by  the 


mortgage.     McGrath 
Hogan,  110. 


V.     Veitch,    1 


Page  299,  sec.  179. 


-Relative  rights  of  senior  and  junior  mort- 
gagees. 


A  second  encumbrancer  is  entitled 
to  a  receiver.  Eaugan  v.  Netland, 
51  Minn.  52 ;  Archdeacon  v.  Bowes, 
3  Anstr.  752;  White  v.  Bishop  of 
Peterborough,  3  Swanst.  109. 

The  application  of  a  junior  encum- 
brancer for  the  appointment  of  a  re- 
ceiver pending  the  action  to  enforce 
his  encumbrance  stands  upon  moi'e 
favorable  grounds  than  that  of  a 
senior  encumbrancer.  Pearson  v. 
Eendrick,  75  Miss.  416. 

The  fact  that,  pending  an  action 
to  foreclose  a  second  mortgage,  the 
holder  of  the  first  mortgage  has  paid 
the  delinquent  taxes  on  the  property 
and  added  the  amount  thereof  to  his 
mortgage,  which  he  has  foreclosed, 
and  on  the  foreclosure  of  which  he 
has  bid  in  the  property  for  the  full 
amount  due  him,  furnishes  no  ground 
for  the  discharge  of  a  receiver  pen- 
dente lite  appointed  in  proceedings  to 
foreclose  the  second  mortgage,  to 
collect  the  rents  of  the  mortgaged 
premises,  and  apply  them  to  the  pay- 


ment of  such  delinquent  taxes  and 
the  interest  due  on  the  prior  mort- 
gage. Farmers'  Nat.  Bank  v.  Back- 
us,  67  Minn.  43. 

The  appointment  of  a  receiver  in 
a  proceeding  to  foreclose  a  second 
mortgage  does  not  preclude  the  ap- 
pointment in  a  proceeding  to  fore- 
close the  first,  the  property  being  the 
same.  Holland  Trust  Co.  v.  Consoli- 
dated Gas  &  E.  L.  Co.  85  Hun,  454. 

The  exclusive  right  of  a  second 
mortgagee  to  the  income  is  limited 
to  a  case  when  the  first  mortgagee 
is  not  a  party.  Miltenberger  v. 
Logansport  R.  Co.  106  U.  S.  286, 
27  L.  ed.  117. 

When  a  receiver  has  been  ap- 
pointed by  a  puisne  encumbrancee 
the  court  will  not  extend  it  to  the 
suit  of  a  prior  encumbrancee.  Broicn 
V.  Nola7i,  10  Ir.  Eq.  Rep.  57. 

The  court  has  power  to  appoint  re- 
ceiver, though  not  granted  in  an  act 
of  Parliament.  DeWinton  v.  Brecon, 
26  Beav.  533. 


Page  302,  sec.  180. — Receiver  in  behalf  of  annuitants. 


A  receiver  will  be  appointed  for 
arrears  in  an  annuity.  Probasco  v. 
Probasco,  30  N.  J.  Eq.  108. 

The  court  by  the  appointment  of  a 

90 


receiver  of  an  annuity  attaches  the 
rent  due  by  tenants.  Hayden  v. 
Shearman,  2'lr.  Ch.  Rep.  137. 

An  annuitant  is  entitled  to  have 


EECEIVERSHIP    OF   PARTNERSHIPS. 


§§  190,  191 


a  receiver  appointed  over  the  bene- 
fice upon  an  interlocutory  applica- 
tion, made  for  that  purpose,  pre- 
vious Lo  the  hearing  of  the  cause. 
Battersby  v.  Eoman,  2  Ir.  Ch.  Rep. 
232. 


A  receiver  may  collect  an  annuity 
in  another  state.  Frazier  v. 
Barnum,  19  N.  J.  Eq.  bHi,  97  xim. 
Dec.  CGG. 


Page  305,  sec.  190. — Partnership;  power  to  appoint  receiver. 


The  power  under  Tex.  Rev.  Stat. 
1895,  ai"t.  1465,  to  appoint  receivers 
in  actions  between  partners,  should 
not  be  exercised  in  the  absence  of  an 
emergency,  without  notice  to  the  ad- 
verse party.  Wehh  v.  Allen,  15  Tex. 
Civ.  App.  605. 

The  power  to  appoint  receivers  in 
actions  between  partners,  conferred 
by  Tex.  Rev.  Stat.  1895,  art.  1465,  is 
to  be  exercised  only  in  accord  with 
the  general  practice  and  principles 
of  equity,  in  cases  where  some  good 


reason  or  necessity  is  shown  for  the 
appointment.     Ihid. 

In  an  action  between  partners, 
where  the  appointment  of  a  receiver 
is  prayed  for,  the  circuit  court  ac- 
quires jurisdiction  of  the  defendant 
where  the  notice  of  motion  is  left 
with  the  defendant's  wife  at  his  resi- 
dence, and  the  defendant  is  not 
shown  to  have  been  without  the 
state, — especially  when  he  appears 
bv  counsel  and  resists  the  motion. 
Allen  V.  Cooley,  53  S.  C.  414. 


Page  308,  sec.  191. — When  appointed. 


Shackelford  v.  Shackelford,  32 
Gratt.  481,  510,  514;  Shulte  v. 
Hoffman,  18  Tex.  678;  Maher  v. 
Bull,  44  111.  97. 

The  executors  of  a  deceased  part- 
ner have  the  right  to  have  a  receiver 
appointed.  Davis  v.  Amer,  3  Drew. 
64. 

A  receiver  is  properly  appointed 
of  goods  belonging  to  a  firm  on  which 
there  are  three  mortgages,  while 
several  unsecured  creditors  are  in- 
terested and  the  partners  are  unable 
to  agree  and  have  applied  for  a  dis- 
solution of  the  partnership.  Rolfe 
V.  Burnham,  110  Mich.  660. 

A  receiver  of  uncollected  accounts 
due  in  a  joint  enterprise  was  ap- 
pointed. Candler  v.  Candler,  Jac. 
225. 

To  entitle  a  partner  who  has  left 
assets  with  a  copartner  for  the  pay- 
ment of  firm  debts  which  the  latter 
assumed,  to  the  appointment  of  a  re- 
ceiver to  prevent  waste  and  misap- 
plication, it  need  not  be  shown  that 
some  partnership  creditor  has  at- 
tempted or  is  about  to  attempt  to 
subject  the  plaintifT  to  liability. 
Allen  V.  Cooley,  53  S.  C.  414. 

A  receiver  of  the  property  of  an  al- 


leged partnership  will  be  appointed, 
although  the  existence  of  the  part- 
nership is  denied  by  the  defendant, 
when  the  court  is  satisfied  from  the 
evidence  in  support  of  the  applica- 
tion that  a  partnership  really  ex- 
isted. Leeds  v.  Townsend,  74  111. 
App.  444. 

Insolvency. 

On  insolvency  of  a  firm  one  who 
has  supplied  goods  may  have  a  re- 
ceiver when  the  property  sold  is 
about  to  be  turned  over  to  a  new  con- 
cern. Bite  Natural  Gas  Co.'s  Ap- 
peal, 118  Pa.  436. 

A  member  of  a  partnership  may 
maintain  an  action  to  place  the  af- 
fairs of  the  concern  in  the  hands  of 
a  receiver,  when  the  partnership  has 
become  insolvent  and  other  members 
of  the  firm  are  charged  with  fraud- 
ulent misapplication  and  improper 
conversion  and  waste  of  assets  of  the 
partnership.  Watson  v.  Bettman, 
88  Fed.  Rep.  825. 

For  fraud  of  one  partner. 

A  court  will  appoint  a  receiver  for 
property  of  a  partnership,  where 
some  of  the  members  are  guilty  of 

91 


./*- 


y 


§  192    ,  .»..  .. .  RECEIVEI^SH^S-; 

J  .     .'■  '      ■ 

a     fraudufenf    "tnisappUcation    H)f -" 

revenues,  itfid  there  is  mability  to 
discharge  heavy  claims  against  the 
partnership  and  judgments  against 
its  members,  while  irreconcilable  dif- 
ferences exist  between  the  members 
as  to  the  management  of  the  prop- 
erty. Watson  V.  Bettman,  88  Fed. 
Rep.  825. 

Misappropriation    of   firm  property. 

Misappropriation  of  partnership 
property  justifies  the  appointment  of 
a  receiver.  Coddington  v.  Tappan, 
26  N.  J.  Eq.  141. 

Assignment   by   each  partner. 

When  each  partner  undertakes  to 
make  an  assignment  to  different  as- 
signees a  receiver  will  be  appointed. 
Fox  V.  Curtis,  176  Pa.  52. 

Danger  of  loss. 

A  receiver  of  a  partnership  will  be 
appointed  when  there  is  danger  of 
ultimate  loss.  Wellman  v.  Barker, 
3  Or.  253. 

Conditional  interest. 

A  conditional  interest  in  a  part- 
nership is  sufficient  cause  for  grant- 
ing a  receiver.  Taylor  v.  Bliley,  86 
Ga.  154. 

Death  of  partner. 

A  receiver  of  partnership  property 
is  properly  appointed  after  the  death 


-SUPPLEMENT. 

of  piie-of  the  partners,  where  the  sur- 
viving partner  has  given  the  admin- 
istratrix of  the  deceased  partner 
notes  for  the  share  of  the  deceased 
partner  which  he  fails  to  pay,  and 
conducts  the  business  in  such  man- 
ner that  the  property  is  greatly  de- 
preciated in  value;  but  such  receiver 
should  not  be  authorized  to  take 
possession  of  the  individual  property 
of  the  surviving  partner.  Adams  V. 
Hannah,  97  Ga.  515. 

Partnership   dissolved. 

A  receiver  of  a  partnership  is 
properly  appointed  during  the  pend- 
ency of  an  action  for  the  settlement 
of  the  partnership  alTairs,  where  the 
partnership  has  expired  by  its  own 
limitation,  and  the  partners  do  not 
desire  to  continue  the  business,  and 
representatives  of  five  sixths  of  the 
interest  therein  request  such  ap- 
pointment. Witherbee  v.  Wither- 
bee,  17  App.  Div.  181. 

Exclusion  of  partner. 

A  receiver  will  be  appointed  when 
there  is  a  refusal  to  allow  a  partner 
to  participate.  Wolbert  v.  Harris, 
7  N.  J.  Eq.  G05. 

The  exclusion  of  one  partner  from 
his  full  share  in  the  affairs  of  the 
partnership  is  ground  for  the  ap- 
pointment of  a  receiver  for  the  part- 
nership property.  Einstein  v. 
Schnebly,  89  Fed.  Rep.  540. 


Page  308,  sec.  192. — When  not  appointed. 


The  usual  rule  is  not  to  appoint 
a  temporary  receiver  of  a  partner- 
ship the  existence  of  which  is  de- 
nied, until  the  question  of  partner- 
ship vel  non  is  determined.  Guild 
v.  Meyer,  56  N.  J.  Eq.  183. 

A  United  States  circuit  court  will 
not  appoint  a  person  receiver  of  a 
partnership  concern  who  resides  out 
of  its  jurisdiction  in  a  state  where 
none  of  the  partnership  assets  are 
located.  Watson  v.  Bettman,  88  Fed. 
Rep.  825. 

A  plaintiff  is  not  entitled  to  have 
a  receiver  appointed  for  a  partner- 
ship of  which  he  is  not  a  member  or 
creditor,  nor  to  an  account  based  on 
92 


its  receipts  and  expenditures. 
Gwinn  v.  Lee,  6  Pa.  Super.  Ct.  646, 
42  W.  N.  C.  124. 

A  person  will  not  be  appointed  as 
receiver  of  tlie  affairs  of  a  partner- 
ship, who  is  interested  in  judgments 
against  its  property,  and  is  con- 
nected by  marriage  with  parties  se- 
cured by  a  deed  of  assignment  for 
the  benefit  of  its  creditors,  and  who 
is  charged  with  cognizance  of  the 
fraudulent  misapplication  of  assets 
by  members  of  the  partnership. 
Watson  V.  Bettman,  88  Fed.  Rep. 
825. 

A  receiver  of  partnership  property 
should  not  be  appointed  because  of 


LEON  F.  MOS 


EEC 


the  objection  of  compB,inant^,.^nd 
iiig  a  suit  by  the  suimiai^4pa3iaer 
against  the  representative  of  a  de- 
ceased partner  for  an  accounting 
and  a  sale  of  the  property  with  jjer- 
mission  to  the  complainants  to  pur- 
chase to  enable  them  to  continue  the 
business  in  their  o\vn  interests, 
where  the  complainants  appear  to  be 
abundantly  responsible  and  able  to 
do  justice  on  a  final  accounting,  and 
the  appointment  of  a  receiver  would 
be  detrimental  to  or  destructive  of 
the  business.  Comstock  v.  McDon- 
ald, 113  Mich.  626. 

The  court  will  not  appoint  a  re- 
ceiver of  the  assets  of  a  firm  prior  to 
the  expiration  of  the  partnership 
term,  except  for  the  purpose  of  the 
preservation  of  the  assets  in  the  face 
of  a  real  danger  of  loss,  although  the 
disagreements  between  the  partners 
are  such  as  to  justify  the  court  in 
decreeing  a  dissolution.  Warwick 
V.  Stockton,  55  N.  J.  Eq.  61. 

A  receiver  will  not  be  appointed 
when  the  only  question  is  whether  a 
partnership  has  been  dissolved.  Fair- 
huj'n  v.  Pearson,  2  Macn.  &  G.  144. 

In  an  action  to  dissolve  a  partner- 
ship, Avhere  it  is  not  alleged  that  the 
defendant  is  insolvent,  and  the  an- 
swer directly  alleges  solvency,  a  re- 
ceiver will  not  be  appointed.  Wales 
V.  Detinis,  9  Wash.  308. 

A  receiver  of  partnership  property 
cannot  be  appointed  where  all  the 
partnership  property  has  been  sold 
under  a  chattel  mortgage,  on  an 
agreement  that  upon  any  sale  by  the 
mortgagee,  who  was  the  purchaser, 
the  residue  above  the  mortgage  debt 
should  belong  to  the  partners,  and 
such  mortgagee  sells  the  property  to 
one  of  the  partners  for  not  more  than 
the  amount  of  the  debt,  even  though 


,TNE 


latteilmayys^flT^f(S'"3lf  amount 
excess  af^ite  albt.     mavis  wL  IV-is^-'' 
wonger,  145  Ind.  426. 

Question  of  damage. 
A  receiver  will  not  be  appointed 
over  a  question  of  damage.  There 
must  be  an  account  to  be  adjusted. 
Morrison  v.  Van  Benthuysen,  103 
N.  Y.  675. 

Dissolution  hy  consent. 

Where  a  partnership  is  dissolved 
by  mutual  consent  a  court  of  chan- 
cery will  not  place  it  in  the  hands  of 
a  receiver.  Cox  v.  Peters,  13  N.  J. 
Eq.  39. 

A  partner  who,  upon  voluntary 
dissolution  of  a  firm,  accepts  a  per- 
sonal covenant  of  his  copartner  to 
pay  its  liabilities  and  account  to  him 
for  his  interest  in  the  assets,  is  not 
entitled,  in  an  action  for  an  account- 
ing and  the  recovery  of  the  amount 
the  copartner  agreed  to  pay  him,  to 
the  appointment  of  a  receiver  of  the 
property.  Alcott  v.  Vultee,  33  App. 
Div.  245. 

Mere  delay. 
Mere  delay  on  the  part  of  surviv- 
ing partners  will  not  justify  the  ap- 
pointment of  a  receiver.     Collins   v. 
Young,  28  Eng.  L.  &  Eq.  14, 

Abandonment. 
A  partner  who  abandons  the  part- 
nership enterprise  is  not  entitled  to 
the  appointment  of  a  receiver  and  an 
injunction  against  the  collection  or 
receiving  of  partnership  debts  or 
moneys,  where  his  interest  has  been 
sold  under  execution  against  the  firm 
to  a  third  person,  and  the  business 
has  been  carried  on  from  that  time 
under  a  new  firm  name.  Yoos  v. 
Doyle,  4  Lack.  L.  News,  128. 


Page  336,  sec.  209. — Receiver's  power  and  duty. 


To  set  aside  transfer;  distribution. 

A  receiver  appointed  in  supple- 
mentary proceedings  against  a  part- 
nership, who  brings  an  action  to  set 
aside  a  transfer  by  the  partnership 
when  insolvent  with  intent  to  pre- 
fer certain  creditors,  in  violation  of 
1  N.  Y.  Rev.  Stat.  p.  766,  §  20,  is  not 


entitled  to  all  the  proceeds  of  the 
property  so  transferred,  without  re- 
gard to  its  amount,  but  only  to  a 
sufficient  amount  to  pay  the  judg- 
ments upon  which  he  was  appointed 
receiver  and  the  expenses  of  the  re- 
ceivership. Stiefel  V.  Berlin,  28  App. 
Div.  103. 


98 


§  210 


KECEIVERSHIPS— SUPPLEMENT. 


Over  funds  deposited  before  appoint- 
ment. 

A  receiver  of  a  partnership  ap- 
pointed on  the  same  daj-  that  a  bank 
balance  in  the  name  of  the  firm  was 
appropriated  by  tlie  bank,  under  an 
agreement  with  the  depositor  in  pay- 
ment of  sums  due  it,  is  not  entitled 
to  the  fund  as  against  the  bank,  un- 
less it  appears  that  he  was  appointed 
before  the  account  was  closed.  Lon- 
don d  River  Plate  Bank  v.  Hanover 
Nat.  Bank,  36  App.  Div.  487. 

To  prosecute  and  defend. 

A  receiver  of  partnership  assets 
should  not  be  authorized  in  advance 
to  prosecute  and  defend  without  fur- 
ther order  of  the  court  any  actions 
brought  by  or  against  the  partners 
pertaining  to  the  partnership  busi- 
ness. Withcrbee  v.  Witherbee,  17 
App.  Div.  181. 

To  prevent  levy  of  attachment. 

A  receiver  appointed  in  good  faith 
to  close  up  the  business  of  a  partner- 
ship and  distribute  its  assets  pro 
rata  among  its  creditors  will  not  be 
required  to  permit  a  levy  on  the 
partnership  property  of  a  writ  of  at- 
tachment by  a  firm  creditor  issued 
before  the  proceedings  for  the  dis- 
solution of  the  partnership  were 
commenced.  Myers  v.  Myers,  15  App. 
Div.  448,  Affirming  18  Misc.  663. 

To  permit  levy  of  execution. 

The  court  appointing  a  receiver  of 
a  solvent  firm  pending  an  action  for 
dissolution  should,  upon  an  applica- 
tion therefor,  though  not  in  the  ac- 
tion for  dissolution  and  not  made 
upon  notice  to  the  partners,  permit 
the  levy  of  an  execution  upon  the  as- 
sets of  the  firm  in  his  hands  under  a 
judgment  against  the  partners.  Re 
Thompson,  10  App.  Div.  40. 


To  sell  property. 

The  jurisdiction  of  a  court  of 
equity  in  an  action  to  wind  up  a 
partnership  is  not  local  niercij',  but 
extends  so  far  as  to  authorize  the  ap- 
pointment of  a  receiver  to  sell  real 
property  constituting  a  part  of  the 
partnership  assets,  even  though  it 
may  be  situated  in  another  state. 
Dunlap  v.  Byers,  110  Mich.  100. 

To  question  judgments. 

A  receiver  in  a  suit  between  part- 
ners for  dissolution  cannot  question 
judgments  confessed  by  the  firm  to 
give  preferences.  Weber  v.  Weber,  90 
Wis.  467. 

To  recover  money  or  property. 

The  receiver  of  a  partnership  may 
recover  from  plaintiff  collections 
made  just  prior  to  the  application 
for  the  appointment.  Murphy  v. 
DuBcrg,  11  Abb.  N.  C.  112. 

A  receiver  of  partnership  assets, 
appointed  in  a  suit  for  an  account- 
ing between  the  pai-tners,  has  no  au- 
thority to  compel  one  of  the  parties 
to  regain  and  turn  over  to  him  prop- 
erty which  has  passed  out  of  his 
hands  long  before.  Ferguson  v. 
Bruckman,  23  App.  Div.  182. 

To  sell  manufactured  articles. 

The  receiver  of  a  partnership  on 
a  bill  for  dissolution  has  power  to 
sell  manufactured  articles  on  hand. 
Montross  v.  Mabie,  30  Fed.  Rep.  234. 

Whom    the    receiver  represents. 

A  receiver  of  a  partnership  repre- 
sents, not  only  the  members  of  the 
firm,  but  also  all  the  creditors,  in  an 
action  brought  by  him.  Lees  v.  Dob- 
son,  26  App.  Div.  024. 

A  partnership  receiver  does  not 
represent  creditors  to  such  extent  as 
to  attack  a  chattel  mortgage  given 
by  the  firm.  Walsh  v.  /S7.  Paul 
School  Funiture  Co.  60  Minn.  397. 


Page  338,  sec.  210. — ^Effect  of  appointment. 


The  appointment  of  a  temporary 
receiver  in  an  action  for  the  dissolu- 
tion of  an  insolvent  partnership  and 
the  appointment  of  a  receiver  puts 
94 


the  firm  assets  under  the  control  of 
the  court  for  pro  rata  distribution 
among  the  general  creditors, — at 
least  where    the    insolvency    of    the 


RECEIVERSHIP  OF  CORPORATIONS. 


224 


firm  is  sufBciently  set  up  in  the 
pleadings.  Myers  v.  Myers,  18  Misc. 
663,  Affirmed  in  15  App.  Div.  448. 

No  partnership  between  two  rail- 
road companies  exists  either  between 
the  parties  or  as  to  third  persons,  be- 
cause the  receiver  of  one  of  the  com- 
panies operates  both  roads  jointly, 
and  part  of  the  gross  receipts  is 
paid  to  the  other  company.  Hous- 
ton d  T.  C.  R.  Co.  V.  McFadden,  91 
Tex.  194,  Affirming  in  Part  and  Re- 
versing in  Part  40  S.  W.  216. 

In  a  suit  for  dissolution  of  a  part- 
nership, in  which  a  receiver  has  been 
appointed,  the  court  may  order  a  sale 
of  the  property  where  the  partner- 
ship is  insolvent  and  the  business  is 
being  carried  on  at  a  loss.  Wulff  v. 
San  Joaquin  County  Super  Ct.  110 
Cal.  21.5. 

An  order  appointing  a  receiver  of 
firm  assets  is  an  equitable  assign- 
ment for  the  benefit  of  the  firm 
creditors.     Re  Hamilton,  26  Or.  579. 

The  appointment  of  a  receiver  to 
take  charge  of  the  assets  of  a  part- 
nership at  the  instance  of  a  creditor 
who  attached  the  same  for  a  debt  of 
tne  firm  does  not  prevent  the  issu- 
ance of  another  order  of  attachment 
without  a  new  affidavit  or  bond,  to 


another  county,  against  land  belong- 
ing to  one  of  the  partners.  Runner 
V.  Scott,  150  Ind.  441. 

A  creditor  of  a  limited  partner- 
ship association  of  which  a  receiver 
has  been  appointed  is  not  thereafter 
entitled  to  issue  execution  on  his 
judgment  against  subscribers  to 
stock  of  the  association  whose  sub- 
scriptions are  not  paid  up.  Rouse 
V.  Detroit  Cycle  Co.  Ill  Mich.  251, 
38  L.  R.  A.  794. 

A  partner's  book  accounts  or  cash 
on  hand  are  assets  and  property  of 
the  partnership,  within  the  meaning 
of  a  bond  given  by  him  for  the  pur- 
pose of  recovering  possession  of  the 
partnership  property  from  a  receiver, 
conditioned  upon  his  accounting  for 
all  the  assets  and  property  of  the 
partnership  then  in  his  possession 
or  under  his  control,  or  Avhich  might 
thereafter  come  into  his  possession, 
as  ascertained  by  the  court.  Larsen 
V.  Winder,  20  Wash.  419. 

A  receivership  in  an  action  to  dis- 
solve a  partnership  will  be  set  aside 
as  void  as  to  the  firm  creditors,  where 
made  with  the  intent  to  hinder,  de- 
lay, and  defraud  them.  Metcalf  v. 
Moses,  35  App.  Div.  596. 


Receivership  of  corporations. 


Page  350,  sec.  224. — Application;  by  whom  made. 


The  application  for  the  appoint- 
ment of  a  receiver  for  a  street-rail- 
way company  may  be  made  by  a 
mortgagee  for  threatened  loss  of 
franchises.  Union  Street  R.  Co.  v. 
Saginaw,  115  Mich.  300. 

Application  by  a  simple-contract 
creditor,  in  the  absence  of  statute,  is 
not  sufficient.  Smith-Dinvmiclc  Lum- 
her  Co.  V.  Tcague  (Ala.)   24  So.  4. 

Nor  is  the  application  by  a  credit- 
or who  has  accepted  a  firm  as  payers, 
instead  of  a  corporation.  Tcnney  v. 
Ballard,  W.  &  B.  Hat  Co.  17  Tex. 
Civ.  App.  144. 

Appointment  may  be  made  on  the 
application  of  a  lessor  of  a  mining 
company  to  whom  there  is  a  large  in- 


debtedness due.  Kanaioha  Coal  Co. 
V.  Ballard  d  W.  Coal  Co.  43  W.  Va. 
721. 

And  when  the  corporation  is  insol- 
vent. Oleson  V.  Bank  of  Tacoma,  15 
Wash.  148. 

It  may  be  made  by  a  state's  attor- 
ney in  proceedings  statutory.  State, 
Amsterdamsch  Trustees  Kantoor,  v. 
Spokane  County  Super.  Ct.  15  Wash. 
008,  37  L.  R.  A.  111. 

Or  by  one  corporation  for  an  ac- 
counting by  another,  the  property  of 
the  latter  being  in  the  hands  of  trus- 
tees. American  Mortg.  Co.  v.  Sid- 
way  (111.)  12  Nat.  Corp.  Rep.  727, 
28  Chicago  Leg.  News,  394. 

Or  by  the  state  in  the  interest  of 

95. 


§  234 


RECEIVERSHIPS— SUPPLEMENT. 


the  public.  East  Line  &  R.  River  R. 
Co.  V.  State,  lb  Tex.  434;  Texas 
Trunk  R.  Co.  v.  State,  83  Tex.  1. 

Or  on  the  application  of  an  as- 
signee of  an  insolvent  foreign  cor- 
poration. Biisivell  V.  Supreme  Sit- 
ting of  0.  of  I.  H.  IQl  Mass.  224,  23 
L.  R.  A.  846. 

Stockholders. 

The  appointment  will  not  be  made 
on  the  application  of  a  stockholder 
■where  no  advantage  would  accrue  to 
him,  but  a  loss  to  other  stockholders 
would  ensue.  Robison  v.  Cleveland 
City  R.  Co.  7  Ohio  Dec.  312. 

Or  on  the  application  of  a  bond- 
holder merely  because  of  default  in 
the  interest,  where  the  management 
is  proper  and  the  application  of  the 
funds  judicious.  Trust  d  Deposit 
Co.  V.  Spartanburg  Watenoorks  Co. 
91  Fed.  Rep.  324. 

Or  on  the  application  of  a  stock- 
holder merely  because  of  the  unlaw- 
ful cancelation  of  preferred  stock, 
where  injunction  is  available.  Em- 
pire Hotel  Co.  V.  Main,  98  Ga.  176. 

Or  at  the  suit  of  a  minority  stock- 
holder, when  the  directors  are  acting 
honestly  and  within  the  scope  of 
their  corporate  powers.  Hunt  v. 
American  Grocery  Co.  80  Fed.  Rep. 
70. 

Or  at  the  suit  of  stockholders, 
when  the  appointment  would  hinder 
and  delay  creditors.  Bell  v.  Wood, 
181  Pa.  175. 

Nor  is  the  application  suflBcient 
when  made  by  a  stockholder  on  the 
ground  of  mismanagement  and  in- 
solvency, unless  some  undoubted 
right  belonging  to  him  is  in  danger. 
Gracey  v.  Pittsburgh  Trolley  Co.  28 
Pittsb.  L.  J.  N.  S.  109;  People's  In- 
vestment Co.  V.  Craicford  (Tex.  Civ. 
App.)   45  S.  W.  738. 

Or  by  a  small  stockholder  on  the 
ground  of  a  resolution  conferring 
on  one  stockholder  the  full  manage- 
ment, and  mismanagement.  Rumney 
V.  Detroit  &  M.  Cattle  Co.  (Mich.) 
5  Det.  L.  N.  96,  74  N.  W.  1043. 

Or  by  a  stockholder  alleging  a  dif- 
ference of  opinion  between  him  and 
the  other  stockholders,  who  are  in 
the  majority,  as  to  the  management, 
when  there  is  no  fraud  appearing  on 
96 


the  part  of  the  majority.  Ponca 
Mill  Co.  V.  Mikescll,  55  Neb.  98. 

Nor  by  a  stockholder  who  claims 
to  be  a  creditor  on  account  of  divi- 
dends on  his  stock,  which  should 
have  accrued.  Lcary  v.  Columbia 
River  &  P.  S.  Nav.  Co.  82  Fed.  Rep. 
775. 

The  appointment  may  be  made  on 
the  application  of  a  stockholder  on 
the  ground  of  mismanagement  and 
misappropriation.  Stevens  v.  South 
Ogden  Land,  Bldg.  &  Improv.  Co.  14 
Utah,  232. 

Minority  bondholders. 

The  minority  mortgage  bondhold- 
ers of  a  street  railroad  are  not  en- 
titled to  a  receiver  on  foreclosure, 
notwithstanding  interest  due  and 
other  liens,  when  the  majority  bond- 
holders refuse  to  request  the  trustee 
to  foreclose,  in  the  absence  of  fraud 
and  when  the  road  is  in  the  hands  of 
a  receiver  of  another  court,  no  prob- 
able danger  appearing.  Lancaster 
V.  Asheville  Street  R.  Co.  90  Fed. 
Rep.  129. 

Judgment  creditors. 

A  receiver  may  be  appointed  at  the 
instance  of  a  judgment  creditor. 
Monarch  Co.  v.  Bank  of  Hardins- 
burg,  20  Ky.  L.  Rep.  92;  United 
Glass  Co.  V.  Vary,  152  N.  Y.  121; 
Dreyfuss  v.  Charles  Scale  &  Co.  18 
IMisc.  551. 

The  application  may  be  made  by  a 
resident  creditor  for  the  appointment 
over  a  foreign  corporation  already  in 
the  hands  of  a  receiver  at  its  domi- 
cil.  Security  Sav.  &  L.  Asso.  v. 
Moore,  151  Ind.  174. 

To  justify  the  appointment  on  the 
application  of  a  creditor,  it  should 
appear  that  he  has  a  valid  claim, 
that  there  are  assets  applicable  to 
its  payment,  that  he  has  exhausted 
his  legal  remedies,  and  that  there  is 
danger  of  loss.  Falmouth  Nat.  Bank 
V.  Cape  Cod  Ship  Canal  Co.  166  Mass. 
5.50. 

Whenever  a  judgment  creditor  of 
a  railway  company  is  unpaid  the  ap- 
pointment of  a  receiver  is  a  matter 
of  right;  and  the  appointment  is 
"necessary"  within  the  meaning  of 
the  English  railway   companies    act 


RECEIVERSHIP  OF  CORPORATIONS. 


§  225 


of  1867.     Re  Manchester  &  M.  R.  Co. 
L.  R.  14  Ch.  Div.  645. 

The  appointment  of  a  temporary 
receiver  of  a  corporation  at  the  in- 
stance of  a  judgment  creditor  un- 
der Mo.  Rev.  Stat.  1889,  §§  2790- 
2792,  is  justified  upon  a  petition  and 
testimony  showing  that  some  of  the 
officers  have  appropriated  the  funds 
to  the  amount  of  thousands  of 
dollars  to  their  own  use,  and  have 
been  guilty  of  other  improper  acts 
calculated  to  defeat  the  plaintiflf's 
demand,  and  no  contradictory 
proof  is  submitted.  Glover  v.  St. 
Louis  Mut.  Bond  Invest.  Co.  138 
Mo.  408. 

Who  appointed. 

The  principal  manager  of  an  in- 
solvent corporation  may  be  ap- 
pointed receiver.  Re  Premier  Cycle 
Mfg.  Co.  70  Conn.  473.  But  see, 
contra,  Middlesex  County  Freehold- 
ers V.  State  Bank,  28  N.  J.  Eq.  166. 

Extension  of  receivership. 

A  receivership  over  so  much  of  a 
line  of  railroad  as  has  been  com- 
pleted may  be  extended  over  other 
parts  thereafter  completed.  Re 
Southern  R.  Co.  Ir.  L.  R.  5  Eq.  165. 

A  receiver  of  all  the  property  of 


a  corporation  of  which  a  receiver  has 
already  been  appointed  cannot  be 
appointed  in  an  action  to  set  aside 
a  transfer  of  property  to  such  corpo- 
ration by  one  against  whom  plaintiff 
had  recovered  judgment, — especially 
where  it  is  not  shown  that  the  prop- 
erty was  transferred  by  such  judg- 
ment debtor.  Schulze  v.  Sizer,  14 
App.  Div.  274. 

The  receiver  appointed  in  an  ac- 
tion for  dissolution  of  a  corporation 
should  be  appointed  in  an  action  to 
foreclose  a  chattel  mortgage  by  the 
same  corporation.  Farmers'  Loan 
&  T.  Co.  V.  Eotel  Brunswick  Co.  44 
N.  Y.  Supp.  350. 

Judgment  required. 

The  appointment  of  a  temporary 
receiver  does  not  obviate  the  neces- 
sity of  judgment  against  the  corpo- 
ration, and  the  return  of  an  execu- 
tion unsatisfied,  in  a  proceeding  to 
enforce  a  stockholder's  liability. 
United  States  Glass  Co.  v.  Levett, 
24  Misc.  429. 

A  creditor  may  maintain  a  suit  to 
enforce  unpaid  subscriptions,  not- 
withstanding the  pendency  of  a  fore- 
closure action  wherein  a  receiver 
has  been  appointed.  Lea  v.  Iron 
Belt  Mercantile  Co.  (Ala.)  24  So.  28. 


Page  355,  sec.  225. — Grounds  for  appointment. 


In  Missouri,  statute  and  extreme 
necessity  will  justify  appointment. 
Ford  V.  Kansas  City  d  I.  Short  Line 
R.  Co.  52  Mo.  App.  439. 

Disagreement  between  stockhold- 
ers as  to  management  is  not  always  a 
ground.  Einstein  v.  Rosenfeld,  38 
N.  J.  Eq.  309. 

Nonpayment  of  taxes,  sale  for 
taxes,  insolvency,  and  refusal  of 
trustees  to  act  justify  appointment 
of  railway  receiver.  Putnam  v. 
Jacksonville,  L.  &  St.  L.  R.  Co.  61 
Fed.  Rep.  440. 

In  Massachusetts,  insolvency  and 
confusion  of  affairs  are  not  suffi- 
cient, as  in  such  case  the  insolvent 
law  affords  a  complete  remedy.  Fal- 
mouth Nat.  Bank  v.  Cape  Cod  Ship 
Canal  Co.  166  Mass.  550. 

Insolvency  alone  is  not  sufficient 


if  it  appears  that  business  is  about 
to  be  resumed  with  safety.  Cook  v. 
East  Trenton  Pottery  Co.  53  N.  J. 
Eq.  29. 

But  where  insolvency  is  shown, 
and  the  rights  of  creditors  are  en- 
dangered, an  appointment  will  be 
made.  Porter  v.  Industrial  Infor- 
mation Co.  5  Misc.  262. 

In  Illinois,  to  justify  the  appoint- 
ment under  §  25  of  the  incorporation 
act,  it  must  be  shown  that  the  sus- 
pension of  business  is  permanent, 
and  not  such  as  arises  from  an 
emergency.  Brabrook  Tailoring  Co. 
v.  Belding  Bros.  40  111.  App.  326. 

The  exclusion  of  bondholders  from 
participation  in  the  management  is 
ground  for.  Benedict  v.  St.  Joseph 
&  W.  R.  Co.  19  Fed.  Rep.  173. 

Interest  due  and  unpaid,  taxes 
7  97 


§  225 


RECEIVERSHIPS— SUPPLEMENT. 


due,  and  judgments  with  failure  to 
elect  ollicers,  are  grounds  for.  Ralph 
V.  ^yisnc)•,  100  JMich.  104. 

Appointment  will  not  be  made,  un- 
der the  Alabama  statute,  unless  such 
facts  exist  as  call  for  the  general  ex- 
ercise of  chancery  jurisdiction  and 
procedure,  ^\'catherly  v.  Capital 
City  Water  Co.  115  Ala.  15G. 

Appointment  in  Maryland  is  dis- 
cretionary, and  is  made  only  where 
there  is  fraud,  spoliation,  or  inuni- 
nent  danger  of  loss.  Htcinherger  v. 
Independent  Loan  d  Sav.  Asso.  84 
Md.  625. 

Insolvency  must  exist,  and  debt 
must  be  reduced  to  a  judgment. 
Wallace  v.  Pierce-Wallace  Pub.  Co. 
101  Iowa.  313,  38  L.  R.  A.  122. 

On  the  concurrence  of  the  com- 
pany and  its  execution  creditors,  a 
receiver  will  be  appointed  to  prevent 
the  jeopardizing  of  corporate  assets 
by  sheriff  sales.  Line  v.  Carlisle 
Mfg.  Co.  5  Pa.  Dist.  R.  G42. 

In  New  York  a  receiver  of  the 
property  and  effects  of  a  foreign  cor- 
poration, to  wind  up  its  affairs,  will 
not  be  appointed  with  a  view  of 
winding  up,  under  §  1784  of  the  Code. 
Dreyfuss  v.  Charles  Scale  &  Co.  18 
Misc.  551. 

An  appointment  will  not  be  made 
simply  because  there  are  unpaid 
judgments,  taxes,  and  indebtedness, 
if  it  appears  that  the  indebtedness 
will  be  liquidated  by  the  forbearance 
of  the  principal  creditors.  Ft. 
Wayne  Electric  Corp.  v.  Franklin 
Electric  Light  Co.  (N.  J.  Eq.)  40 
Atl.  441. 

The  general  allegation  of  expected 
exposure  if  the  corporation  is  not 
wound  up  is  not  sufficient.  It  must 
be  shown  that  there  is  mismanage- 
ment, improper  application  of  funds, 
or  other  acts  of  maladministration. 
Mulqueeney  v.  Shaw,  50  La.  Ann. 
1060. 

Disagreement  as  to  the  manage- 
ment and  control  is  not  sufficient  to 
warrant  the  appointment  of  a  re- 
ceiver. Wallace  v.  Pierce-Wallace 
Pub.  Co.  101  Iowa,  313,  38  L.  R.  A. 
122. 

A  court  of  equity  may  decree  the 
dissolution  of  an  unincorporated  vol- 
untary association,  and  appoint  a 
receiver.  Lafond  v.  Deems,  1  Abb. 
98 


N.  C.  318;  Hinckley  v.  Blethen,  78 
Me.  221. 

And  so  of  a  club.  Re  St.  James 
Club,  7  Eng.  L.  &  Eq.  140. 

A  corporation  may  be  dissolved 
and  a  receiver  appointed  where  it 
has  misused  its  corporate  authority. 
State  V.  Cannon  River  Mfg.  Asso.  67 
Minn.  14. 

Only  by  virtue  of  a  statute  can  the 
management  of  a  business  be  taken 
from  a  corporation.  People,  Port 
Huron  d-  G.  R.  Co.,  v.  St.  Clair  Cir- 
cuit Judge,  31  Mich.  456. 

Appointment  as  a  matter  of 
course  follows  a  decree  for  dissolu- 
tion. Nichols  V.  Perry  Patent  Arm 
Co.  11  N.  J.  Eq.  126. 

The  appointment  of  a  receiver  of 
a  trading  corporation  is  proper  pend- 
ing litigation  over  its  conduct  and 
management,  between  the  owners  of 
its  stock,  and  where  its  affairs  have 
come  to  a  deadlock.  Sternberg  v. 
Wolff,  56  N.  J.  Eq.  389,  39  L.  R.  A. 
762. 

But  the  appointment  can  only  be 
made  in  a  civil  action.  Clinch  v. 
South  Side  R.  Co.  4  Thomp.  &  C.  224. 

A  receiver  was  properly  appointed, 
and  an  injunction  against  disposi- 
tion of  property  of  a  corporation 
granted,  where  such  corporation  had 
arranged  with  two  of  its  principal 
creditors  for  additional  credit  by 
them,  secured  by  its  judgment  notes, 
and  a  majority  of  the  directors  of 
such  corporation  were  appointed  by 
such  creditors,  at  the  suit  of  other 
creditors  who,  in  ignorance  of  the 
situation  and  while  there  was  no  ap- 
parent change  of  management  or 
control  of  the  business,  gave  credit 
to  such  corporation  for  large  sums 
for  which  they  received  no  security. 
United  States  Rubber  Co.  v.  Ameri- 
ca7i  Oak  Leather  Co.  53  U.  S.  App. 
444,  82  Fed.  Rep.  248,  27  C.  C.  A.  118. 

Under  Kan.  Civ.  Code,  §  254,  a  re- 
ceiver may  be  appointed  at  the  suit 
of  a  stockholder,  where  the  corporate 
business  has  been  mismanaged  so 
that  it  has  become  insolvent,  and 
where  officers  have  conspired  to  di- 
vert business  to  another,  dissipate 
its  funds,  and  apply  assets  to  the 
benefit  of  officers.  Re  Lewis,  52  Kan. 
600. 

A  receiver  may  be  appointed  of  the 


KECEIVERSHIP  OF  CORPOEATIONS. 


I  226 


property  of  a  corporation  which  has 
transferred,  all  its  property  to  a  for- 
eign corporation  in  consideration  of 
the  latter's  assumption  of  all  its  ob- 
ligations and  liabilities,  for  the  en- 
forcement of  a  judgment  resisted  by 
both  companies,  where  the  domestic 
corporation  refuses  to  take  any  steps 
to  compel  the  foreign  corporation  to 
perform  its  agreement  to  pay  the  li- 
ability, and  the  companies  are  com- 
bining and  colluding  to  avoid  the 
judgment  and  defeat  its  payment. 
Bates  V.  International  Co.  84  Fed. 
Eep.  518. 

A  receiver  of  building  and  loan  as- 
sociations may  be  appointed  after  ex- 
piration of  three  years  from  the  dis- 
solution (provided  for  by  statute), 
if  the  application  is  made  before  such 
expiration.  Hatfield  v.  Cummings, 
152  Ind.  280. 

In  determining  whether  a  receiver 
shall  be  appointed  of  a  building  as- 
sociation, unpaid  dues  will  be  con- 
sidered an  asset  of  doubtful  value 
where  the  amount  has  been  suffered 
to  reach  undue  proportions  while  the 
association  was  financially  em- 
barrassed. Com.,  McCormick,  v. 
Pennsylvania  Bldg.  &  L.  Asso.  20  Pa. 
Co.  Ct.  589. 

A  receiver  will  be  appointed  of  a 
national  building  association  which 
has  for  several  years  been  on  the 
verge  of  bankruptcy,  has  been  care- 
lessly managed,  and  whose  expenses 
have  been  out  of  all  proper  pro- 
portion to  the  amount  of  business 
transacted,  and  some  of  whose  offi- 
cers have  preferred  their  own  inter- 
ests to  those  of  the  association.  Ibid. 


The  auditor  of  public  accounts, 
after  giving  notice  to  a  building  and 
loan  association  requesting  it  to  cor- 
rect certain  illegal  practices  speci- 
fied, and  stating  that  the  assets  of 
the  association  are  insufficient  to 
justify  a  continuance  of  business, 
may  maintain  a  bill  for  the  appoint- 
ment of  a  receiver  for  such  associa- 
tion under  the  Illinois  statute,  al- 
though the  attorney  general  gives 
his  opinion  that  a  certain  by-law  of 
the  association  on  which  the  auditor 
based  his  conclusion  as  to  the  illegal 
practice  is  valid.  Illinois  Bldg.  & 
L.  Asso.  V.  People,  Gare,  173  111.  638. 

A  building  and  loan  association 
which  has  no  creditors  or  liabilities, 
except  its  liability  to  its  stockhold- 
ers on  account  of  its  stock,  is  not 
"insolvent"  within  Minn.  Gen.  Stat. 
1894,  chap.  76,  providing  for  the  ap- 
pointment of  a  receiver  for  corpora- 
tions when  they  are  insolvent,  al- 
though there  is  a  deficiency  in  its 
assets  so  that  it  cannot  mature  the 
stock  or  pay  back  to  stockholders  the 
actual  money  paid  by  them.  Sjoberg 
v.  Security  Sav.  &  L.  Asso.  (Minn.) 
75  N.  W.  1116. 

A  receiver  of  a  building  and  loan 
association  will  be  appointed  pen- 
dente lite,  where  a  void  general  as- 
signment has  been  made  by  the  di- 
rectors without  authority  from  the 
stockholders, — especially  where  the 
new  board  of  directors  has  not  been 
lawfully  elected.  Poioers  v.  Blue 
Grass  Bldg.  &  L.  Asso.  86  Fed.  Rep. 
705. 


Page  363,  sec.  226. — When  not  appointed. 


A  receiver  will  not  be  appointed 
over  a  corporation  pending  a  writ  of 
error,  where  collusion  is  shown  and 
no  effort  has  been  made  to  procure 
proper  action  by  the  directors.  Beck- 
er V.  Hoke,  53  U.  S.  App.  366,  80  Fed. 
Rep.  973,  26  C.  C.  A.  282. 

And  so  where  the  directors  are  re- 
liable and  are  closing  up  the  busi- 
ness. City  Pottery  Co.  v.  Yates,  37 
N.  J.  Eq.  543. 

Nor  on  the  application  of  bond- 


holders for  one  quarter  of  the  mileage 
the  other  bondholders  of  three  quar- 
ters of  the  mileage  objecting.  Mer- 
riam  v.  St.  Louis,  C.  G.  &  Ft.  S.  R. 
Co.  136  Mo.  145. 

Nor  on  the  application  of  a  cred- 
itor who  has  been  tendered  the 
amount  due  him.  Miller  v.  Southern 
Land  &  Lumber  Co.  53  S.  C.  364. 

A  receiver  will  not  be  appointed 
for  a  guaranteeing  corporation, 
where  there   is   no   lien  and    wIkto 

99 


§§  329,  230 


RECEIVERSHIPS— SUPPLEMENT. 


the  principal  debtor  is  solvent.  Guil- 
martin  v.  Middle  Georgia  d  A.  Ji.  Co. 
101  Ga.  505. 

Nor  on  the  application  of  creditors 
where  tliere  is  no  insolvency  and  no 
mismanagement  or  waste.  Weath- 
crly  V.  Capital  City  Water  Co.  115 
Ala.  15G. 

Nor  on  the  application  of  the  in- 
habitants of  a  city,  to  carry  on  the 
business  of  a  corporation,  where  the 
the  charter  has  been  forfeited.  Ibid. 

Nor  on  the  application  of  the  at- 
torney general,  when  receivers  have 
already  been  apjrointed  in  a  proceed- 
ing for  voluntary  dissolution.  Peo- 
ple V.  Murray  Hill  Bank,  10  App. 
Div.  328. 

Nor  when  the  charter  provides  an 
adequate  method  of  winding  up  the 


affairs.  Pringlc  v.  Eltringham 
Constr.  Co.  49  La.  Ann.  301. 

A  previous  assignment  by  an  in- 
solvent corporation  is  no  defense  to 
the  appointment  under  the  Texas 
statute.  Milam  County  Co-Op.  Cot- 
ion  tC-  .1/.  Alliance  v.  Tennent-Htrih- 
ling  iihoe  Co.  (Tex.  Civ.  App.)  40  S. 
\V.  331. 

The  owner  of  worthless  stock  in 
an  insolvent  corporation  cannot  ob- 
tain an  order  to  set  aside  an  order  of 
appointment  on  the  ground  of  col- 
lusion between  the  plaintil!  and  the 
otliccrs  and  directors,  in  the  original 
cause  of  action.  Darragh  v.  U.  Wet- 
ter Mfg.  Co.  49  U.  S.  App.  1,  78  Fed. 
Rep.  7,  23  C.  C.  A.  009,  and  see  Bar- 
ron V.  Berry  (111.)  10  Nat.  Corp. 
Rep.  783. 


Page  371,  sec.  229. — In  foreclosure  proceedings. 


A  receiver  will  not  be  appointed 
in  the  foreclosure  of  a  chattel  mort- 
gage, where  the  defendant  is  solvent. 
Stilwell-Bierce  d  Smith-Vaile  Co. 
v.  Williamston  Oil  &  Fertilizer  Co. 
80  Fed.  Rep.  08. 


Nor  in  a  foreclosure  proceeding 
against  a  railroad  company,  where 
it  appears  that  prior  to  the  execu- 
tion of  the  mortgage  the  road  had 
been  leased, 
v.  Eakin,  100  Ky.   745 


Louisville  &  N.  R.  Co. 


Page  371,  sec.  230. — Effect  of  appointment. 


As  to  corporate  powers. 

The  closing  of  the  doors  of  a  na- 
tional bank  by  the  comptroller  of  the 
currency  on  account  of  insolvency 
and  the  appointment  of  a  receiver, 
and  placing  him  in  charge  of  its  as- 
sets to  administer  them  for  the  ben- 
efit of  creditors,  do  not  extinguish 
the  corporation  or  work  a  forfeiture 
of  it  charter.  Hutchison  v.  Crutch- 
er,  98  Tenn.  421,  37  L.  R.  A.  89,  cit- 
ing First  yat.  Bank  v.  National 
Pahquioque  Bank,  14  Wall.  383,  20 
L.  ed.  840 :  Central  Nat.  Bank  v.  Con- 
necticut Mut.  L.  Ins.  Co.  104  U.  S. 
54,  26  L.  ed.  693;  Rosenllatt  v.  John- 
ston, 104  U.  S.  462,  26  L.  ed.  832; 
Chemical  Nat.  Bank  v.  Hartford  De- 
posit Co.  161  U.  S.  1,  40  L.  ed.  595. 

The  appointment  of  a  receiver  so 
far  dissolves  a  corporation  that 
thereafter  no  duty  devolves  on  the 
trustees  to  make  an  annual  re- 
100 


port.  Huguenot  Nat.  Bank  v.  Stud- 
well,  74  N.  Y.  621. 

The  appointment  of  a  receiver  does 
not  abate  a  suit  by  the  corporation. 
People,  Illinois  Midland  R.  Co.,  v. 
Barnett  Supervisors,  91  111.  422 ; 
People  V.  Troy  Steel  d  I.  Co.  82  Hun, 
303;  Hasselman  v.  Japanese  Develop- 
ment Co.  2  Ind.  App.  180. 

Nor  does  dissolution  abate  pro- 
ceedings pending.  Hai/es  v.  Lycom- 
ing F.^Ins.  Co.  99  Pa.  621. 

The  appointment  does  not  enlarge 
or  restrict  corporate  powers  and 
duties.  The  receiver  is  bound  by  the 
charter.  People  v.  Troy  Steel  d 
I.  Co.  82  Hun,  303;  Safford  v.  Peo- 
ple, 85  111.  558. 

And  does  not  suspend  the  right  of 
a  creditor  to  sue  stockholders.  Pat- 
terson v.  Stewart,  41  Minn.  84,  4  L. 
R.  A.  745. 

Under  a  corporation  created  in 
Connecticut,  domiciled  in  the  United 


RECEIVERSHIP  OF  CORPORATIONS. 


c    001 


states,  debentures  were  secured  on 
land  in  Mexico,  which  land  became 
vested  in  an  English  company  sub- 
ject to  an  express  obligation  to  pay 
off  such  charges  from  the  sale  of  the 
land.  It  was  held  that  the  English 
company  was  responsible  to  the  de- 
benture holders  for  the  proceeds 
coming  into  their  hands.  Mercan- 
tile Invest,  dc  General  Trust  Co.  v. 
River  Plate  Tmst  Loan,  &  Agency 
Co.  [1892]  2  Ch.  303. 

After  the  appointment,  directors 
cannot  ratify  a  transfer  of  property 
made  without  authority.  Linville  v. 
Eadden,  88  Md.  594,  43  L.  R.  A.  222. 

The  appointment  does  not  afl'ect 
legal  proceedings  pending  in  other 
states.  Ward  v.  Connecticut  Pipe 
Mfg.  Co.  71  Conn.  345,  42  L.  R.  A. 
700. 

The  remedy  for  failure  of  a  corpo- 
ration to  fulfil  its  contract  because 
it  is  placed  in  the  bauds  of  a  receiver 
is  to  file  an  intervention  in  the  suit 
in  which  the  receiver  is  appointed. 
Malcomson  v.  Wajrpoo  Mills,  88  Fed. 
Rep.  680. 

Consenting  to  the  appointment  of 
a  receiver  does  not  prevent  the  cor- 
poration from  objecting  to  an  order 


for  additional  power  to  the  receiver. 
8tate  V.  German  Sav.  Bank,  50  Xeb. 
734. 

The  nonperformance  of  a  contract 
cannot  be  recovered  for  if  it  was  oc- 
casioned by  the  appointment  of  a  re- 
ceiver and  injunction  against  the 
further  transaction  of  business.  Mal- 
colmson  v.  Wappoo  Mills,  88  Fed. 
Rep.  680. 

Preferences  of  employees  for  labor. 

The  preference  over  bondholders  of 
an  employee  on  a  street  railroad,  for 
services  as  mechanic,  etc.,  rendered 
within  six  months  next  preceding  the 
appointment,  does  not  arise  in  the 
absence  of  evidence  showing  a  diver- 
sion of  gross  earnings,  or  an  inuring 
benefit  to  the  bondholders  from  such 
service  in  enhanced  values.  Picker- 
ing V.  Townsend   (Ala.)   23  So.  703. 

Lien  of  bank  on  note  deposited. 

The  lien  of  a  bank  upon  a  note  de- 
posited for  collection,  as  against  a 
receiver,  is  limited  to  indebtedness 
then  existing,  and  not  that  which 
may  become  due.  Smith  v.  Eighth 
Ward  Bank,  31  App.  Div.  7. 


Page  375,  sec.  231. — Receiver's  relationship. 


A  receiver  of  an  insolvent  bank 
has  no  greater  rights  than  the  bank 
in  a  fund  against  which  the  bank 
had  given  a  check  which  constituted 
an  equitable  transfer  or  appropria- 
tion of  the  fund.  Fourth  Street 
Bank  v.  Yardley,  165  U.  S.  634,  41 
L.  ed.  855. 

A  receiver  appointed  to  operate  a 
railroad  is  legally  the  agent  of  the 
company  though  under  the  direction 
of  the  court.  Safford  v.  People,  85 
111.  558. 

Presentment  and  demand  of  pay- 
ment made  on  a  receiver  pendente 
lite  of  an  insolvent  bank,  and  notice 
of  nonpayment  by  him,  are  insuffi- 
cient to  bind  an  indorser  of  a  nego- 
tiable certificate  of  deposit  issued 
by  the  bank  before  its  insolvency. 
Jackson  v.  Mclnnis  (Or.)  43  L.  R.  A. 
128. 

A  receiver  of  a  railroad  is  an  of- 
ficer of  the  court.  He  is  a  trustee  for 


bondholders,  etc.  The  books  of  a  re- 
ceiver can  be  examined  on  petition. 
The  examination  must  not  interfere 
with  the  business  of  the  corporation. 
Folder's  Petition,  9  Abb.  N.  C.  268. 

Stockholders  may  be  permitted 
on  motion  to  examine  books  in  the 
hands  of  the  receiver,  and  take  ex- 
tracts therefrom.  People  v.  Cata- 
ract Bank,  5  Misc.  14. 

Plaintiff  as  receiver  not  required 
to  produce  books  for  the  inspection 
of  defendant  before  decree.  Maund 
V.  Allies,  4  Myl.  &  C.  503. 

The  opposite  party  in  a  suit 
against  a  railroad  company  is  enti- 
tled to  the  production  of  the  latter's 
books,  although  it  is  in  the  hands  of 
a  receiver  who  is  entitled  to  the  cus- 
tody of  such  books,  if  he  has  not  ac- 
tually taken  possession  of  them. 
Maxirell  v.  Manitoba  tt  A'.  W.  li.  Co. 
11  Manitoba  L.  Kep.  149, 

101 


§  233  RECEIVERSHIPS— SUPPLEMENT. 

Page  380,  sec.  233. — Receiver's  powers  and  duties. 


Persons  dealing  with  a  receiver 
must  take  notice  that  his  powers  are 
limited  and  he  is  constantly  subject 
to  the  orders  of  the  court.  Brunner 
V.  Central  Gla^s  Co.  IS  Ind.  App. 
174. 

A  receiver  does  not  represent  a 
policy  holder  in  a  mutual  fire  insur- 
ance company — when.  Wilhclm  v. 
Parker,  17  Ohio  C.  C.  234. 

He  has  power  to  intervene  in  an 
attachment  suit  instituted  prior  to 
his  appointment.  Andrews  v.  Steele 
City  Bank,  57  Xeb.  173. 

And  may  institute  a  suit  in  equity 
to  have  the  bonds  issued  by  the  cor- 
poration declared  void.  See  v.  Hep- 
penhciiner,  55  N.  J.  Eq.  240. 

His  power  is  coextensive  only  with 
the  jurisdiction  of  the  court  appoint- 
ing. Security  Sav.  &  L.  Asso.  v. 
Moore,  151  Ind.  174. 

The  duty  of  a  receiver  under  N.  Y. 
act  of  1S49  to  declare  a  dividend  in 
ISO  days  after  his  appointment — 
declared  in  Re  Hollister  Bank, 
23  N.  Y.  50S. 

The  procurement  of  an  order 
validating  the  acts  of  a  receiver  of 
an  insolvent  railroad  company  ap- 
pointed by  a  Federal  court,  and  au- 
thorizing the  issuance  of  certificates 
by  such  receiver  for  the  expenses  of 
the  receivership,  is  not  within  the 
scope  of  the  powers  conferred  on  a 
receiver  of  such  company  appointed 
by  a  state  court  after  the  appoint- 
ment of  the  former  receiver  has  been 
held  illegal  for  want  of  jurisdiction, 
where  the  order  appointing  the  state 
court  receiver  empowers  him  to  take 
possession  of  the  railroad  and  its 
property  and  its  toll  and  income, 
and  continue  and  preserve  the  same, 
and  employ  such  necessary  agents 
for  the  purpose  as  may  be  necessary, 
and  contract  as  receiver  for  the  pay- 
ment of  reasonable  sums  necessary 
to  defray  expenses  of  such  services. 


Crosby  v.  Morristotcn  d  C.  O.  R.  Co. 
(Tenn.  Ch.)   42  S.  W.  507. 

Tiie  abatement  of  proceedings  in 
which  receivers  were  appointed  does 
not  affect  assets  already  received  by 
them,  but  only  affects  assets  not  re- 
duced to  possession.  Re  Murray 
Hill  Bank,  14  App.  Div.  318. 

The  assets  of  a  corporation  in  the 
hands  of  a  receiver  are  not  subject 
to  an  equitable  trust  for  the  payment 
of  dividends  declared  by  the  court  in 
a  former  suit  subsequently  dis- 
missed, and  other  dividends  declared 
by  the  corporation  itself  after  the 
termination  of  such  suit,  which  were 
not  paid,  where  the  funds  for  their 
payment  were  unlawfully  and 
wrongfully  diverted  by  the  corpora- 
tion, and  no  part  thereof,  or  the  pro- 
ceeds thereof,  are  in  the  hands  of  the 
receiver.  Rockwell  v.  Portland  Sav. 
Bank,  31  Or.  431. 

The  execution  by  a  corporation  of 
an  assignment  for  creditors,  even 
though  invalid  because  the  general 
manager  of  the  corporation  by  whom 
it  was  made  acted  without  authority, 
constitutes  an  overt  act  of  insolvency 
where  the  directors  and  stockholders 
do  not  object,  which  will  render  the 
assets  of  the  corporation  a  trust 
fund  for  pro  rata  distribution  under 
the  Tennessee  statute;  and  a  receiv- 
er of  the  corporation  subsequently 
appointed,  to  whom  the  assignee 
transfers  by  consent  all  his  rights, 
whether  treated  as  successor  of  the 
assignee  or  not,  is  vested  with  all  the 
interest  of  such  assignee,  and  it  be- 
comes his  duty  to  recover  for  prop- 
erty sold  by  the  assignee.  McClung 
V.  Embreeville  Freehold,  Land,  Iron 
d  R.  Co.    (Tenn.  Ch.)   42  S.  W.  53. 

The  receiver  of  a  building  and 
loan  association  may  foreclose  a 
mortgage  due  the  association  though 
the  proceeds  are  not  required  to  pay 
its  debts.  Hatfield  v.  Cummings, 
152  Ind.  2S0. 


Page  390. — (m)  Power  to  make  assessments. 


The  court  has  the  right  to  direct 
a  receiver  to  make  a  call  upon  sub- 
scribers to  pay  up  unpaid  subscrip- 
102 


tions.     Barkaloiv  v.  Totten,  53  N.  J. 
Eq.  573. 

A  receiver  in  making  an  assess- 


KECEIVERSHIP  OF  CORPORATIONS. 


§  234 


ment  acts  in  a  ministerial  capacity, 
and  not  judicial.  Jackson  v.  Van 
Slyke,  44  Barb.  116,  note  a. 

Suit  by  a  receiver  to  collect  assess- 
ment. Boicen  v.  Euehn,  79  Wis.  53; 
Pickersgill  v.  Myers,  99  Pa.  602. 

A  judgment  recovered  by  the  re- 
ceiver of  an  insolvent  corporation 
against  each  of  the  corporators,  de- 
termining the  amount  for  which  each 
is  liable  to  creditors,  does  not  au- 
thorize him  to  collect  any  more  from 
each  corporator  than  the  demands  of 
the  creditors  and  the  cost  of  the  re- 
ceivership proceedings  may  require. 
Cole  V.  Adams  (Tex.  Civ.  App.)  1  J. 
A.  319,  49  S.  W.  1052. 

A  receiver  may  be  appointed  to 
make  an  assessment  against  stock- 
holders. Ford  V.  Kansas  City  &  I. 
Short  Line  R.  Co.  52  Mo.  App.  439. 

In  addition  to  liability  on  assess- 
ment, a  member  is  liable  for  a  just 
proportion  of  losses  while  his  policy 
is  in  force.  Sands  v.  Hill,  42  Barb. 
651. 

A  court  through  a  receiver  has  no 
more  power  to  make  assessments  on 
corporate  stock  than  the  directors. 
Great  Western  Teleg.  Co.  v.  Loeicen- 
thal,  154  111.  261. 

An  assessment  by  the  receiver  on 
each  premium  note  for  the  full 
amount  thereof  is  good.  Sands  v. 
Sanders,  28  N.  Y.  416. 

The  making  of  an  assessment  upon 
members  of  a  mutual  benefit  associa- 


tion does  not  make  them  debtors  to 
the  association,  or  entitle  either  it 
or  its  receiver  to  enforce  payment 
thereof  by  suit.  Lehman  v.  Clark, 
174  111.  279,  43  L.  R.  A.  648,  Revers- 
ing 71  111.  App.  366. 

The  cancelation  of  a  policy  in  a 
mutual  insurance  company,  and  the 
return  of  a  premium  note  to  the  in- 
sured, terminate  the  insured's  mem- 
bership and  relieve  him  of  further 
liability  as  to  losses  already  ac- 
crued; and  he  is  not  boimd  by  a  de- 
cree to  which  he  was  not  a  party, 
rendered  at  the  instance  of  a  receiver 
of  the  company,  making  an  assess- 
ment upon  the  jiremium  notes  to  pay 
losses.  Langicorthy  v.  Saxony  Mills, 
72  Mo.  App.  363. 

A  second  assessment  may  include 
the  first.  Sands  v.  Sweet,  44  Barb. 
108,  note  a  116. 

The  New  York  act  of  1852,  giving 
receivers  power  to  make  assessments 
upon  premium  notes,  is  constitution- 
al. Hyatt  V.  McMahon,  25  Barb. 
457. 

A  receiver  may  exercise  the  power 
of  the  board  of  directors  in  making 
assessments,  if  it  fails  to  do  so. 
Maxwell  v.  Akin,  89  Fed.  Rep.  178; 
People  V.  United  States  Mut.  Acci. 
Asso.  10  App.  Div.  319. 

In  making  assessments,  a  receiver 
must  make  allowance  for  such  as  are 
uncollectible.  Insurance  Comrs.  v. 
Commercial  Mut.  Ins.  Co.  20  R.  I,  7. 


Page  391,  sec.  234. — Liability  of  receiver. 


The  receiver  and  manager  of  a  cor- 
poration may  contract  for  supplies, 
but  not  for  ten  months  in  advance 
without  the  sanction  of  the  court. 
Brunner  v.  Central  Glass  Co.  18  Ind. 
App.  174. 

Supplies  furnished  to  an  iron  com- 
pany prior  to  the  appointment  are 
not  entitled  to  preference,  as  in  the 
case  of  a  railroad,  where  the  public 
is  interested.  Manhattan  Trust  Co. 
V.  Seattle  Coal  &  I.  Co.  19  Wash.  951. 

A  fund  in  a  bank,  to  be  delivered 
to  the  person  entitled,  becomes  a 
trust  fund  in  the  hands  of  a  receiver. 
Capital  yat.  Bank  v.  Coldwater  Nat. 
Bank,  49  Nob.  786. 

A    cash   deposit   fraudulently    re- 


ceived by  an  insolvent  bank  after  its 
officers  knew  of  its  insolvency  can- 
not be  reclaimed  from  its  receiver, 
when  it  went  into  the  general  funds 
of  the  bank  and  cannot  be  identified 
and  separated  from  other  funds  on 
hand  when  the  receiver  took  charge. 
Bruncr  v.  First  Nat.  Bank,  97  Tenn. 
540,  34  L.  R.  A.  532. 

The  funds  of  an  insolvent  bank  in 
the  hands  of  a  receiver  are  not  im- 
pressed with  a  trust  for  the  amount 
of  a  draft  collected  by  it  for  the  hold- 
er, in  the  absence  of  any  agn't-nicnt 
that  the  holder  should  rociMve  the 
specific  money  collected  by  tiic  bank, 
although  he  never  specially  agreed 

103 


gg  236,  241 


RECEIVERSHIPS— SUPPLEMENT. 


to  deposit  the  proceeds  with  the  bank. 
Hallam  v.  Tillinghast,  111  Wash.  20. 
The  funds  in  the  hands  of  the  re- 
ceiver of  a  mutual  life  association 
are  not  impressed  with  a  trust  for 
the  payment  of  a  death  claim — when. 


I'coplc,  Atty.  Gen.,  v.  Life  d  Reserve 
Asso.  150  N.  Y.  94. 

A  receiver  is  liable  for  negligence 
resulting  in  a  collision.  Central 
Trust  Co.  V.  Colorado  M.  R.  Co.  1 
Denver  Leg.  Adv.  400. 


Page  402,  sec.  236. — Suits  by  receiver  to  recover  stock  subscription. 


The  receiver  of  an  insolvent  cor- 
poration has  the  power  to  recover 
from  subscribers  to  its  stock  unpaid 
subscriptions.  Russell  v.  Easter- 
hrook,  71  Conn.  50;  Watterson  v. 
Masterso7i,  15  Wash.  511;  State  v. 
Gennan  Sav.  Bank,  50  Neb.  734. 

In  a  suit  to  recover  against  the 
stockholders  a  judgment  against  the 
corporation  is  not  a  prerequisite  in 
Minnesota.  Patterson  v.  Stewart, 
41  Minn.  84,  4  L.  R.  A.  745 ;  but  see 
United  States  Glass  Co.  v.  Levett, 
24  Misc.  429. 

Creditors  of  an  insolvent  corpora- 
tion of  which  a  receiver  has  been  ap- 
pointed may  recover  in  an  action 
against  the  stockholders  under  Minn. 
Gen.  Stat.  1S94,  chap.  76,  to  enforce 
the  double  liability  of  the  stockhold- 
ers, not  only  their  debts  and  the  stat- 


utory costs  and  disbursements  of  the 
action,  but  also  the  receiver's  ex- 
penses to  an  amount  not  exceeding 
such  statutory  liability.  Harper  v. 
Carroll,  06  Minn.  487,  Modified  on 
Rehearing  in  09  N.  W.  1069. 

Money  paid  by  directors  to  a  re- 
ceiver to  make  good  an  impairment 
of  capital  that  should  be  found  to  ex- 
ist, in  excess  of  the  actual  impair- 
ment, is  properly  applicable  on  a 
subsequent  impairment  under  N.  Y. 
Laws  1892,  chap.  688.  Dykman  v. 
Keeney,  10  App.  Div.  610. 

Illegality  in  the  subscription  can- 
not be  set  up  and  a  receiver  ap- 
pointed to  the  prejudice  of  other 
stockholders,  where  benefits  have 
been  accepted  growing  out  of  the 
subscription.  Mulqueeney  v.  Shaw, 
50  La.  Ann.  1060. 


Page  415,  sec.  241. — Not  subject  to  collateral  attack. 

The  appointment  of  a  receiver  of  a  The  acts  of  a  receiver  cannot  be 

corporation    cannot    be    collaterally  questioned  in  collateral  proceedings, 

attacked.     Hatfield     v.     Cummings,  Bradly  v.  Marine  &  River  Phosphate 

152  Ind.  280.  Min.  &  Mfg.  Co.  3  Hughes,  26. 

Page  451. — Receivership  of  railways. 


Application  of  income. 

The  income  of  a  railroad  while  in 
the  hands  of  a  receiver  appointed  at 
the  petition  of  the  mortgagees  will  be 
applied  upon  the  mortgage,  rather 
than  to  the  general  judgment  credit- 
ors of  the  road,  although  the  mortgage 
does  not  expressly  cover  income,  if 
It  authorizes  the  mortgagee  upon  de- 
fault in  payment  of  interest  to  take 
possession  of  the  property.  Central 
Trust  Co.  v.  Chattanooga,  R.  &  C.  R. 
Co.  89  Fed.  Rep.  388. 
104 


A  receiver  on  mortgage  foreclosure 
of  a  division  of  a  railway  is  entitled 
only  to  the  net  earnings  of  the  divi- 
sion after  deducting  its  proportion 
of  the  working  expenses  of  the  whole 
line.  Grey  v.  Manitoba  d-  y.  ^V.  R. 
Co.  [1897]  A.  C.  254,  66  L.  J.  P.  C. 
N.  S.  66. 

Where  the  operation  of  a  railroad 
by  a  receiver  has  demonstrated  its 
ability  to  pay  more  than  the  operat- 
ing expenses  and  the  interest  on  the 
first  mortgage,  and  the  receiver  has 
sufficient  on  hand  to  pay  the  delin- 


RECEIVERSHIP  OF  RAILWAYS. 


287 


quent  interest  on  the  first  mortgage, 
the  second  mortgagees  are  entitled 
to  have  it  so  applied.  Peoria,  D.  & 
E.  R.  Co.  V.  Central  Trust  Co.  83 
Fed.  Rep.  910. 

The  purchasers  at  foreclosure  sale 
are  not  entitled  to  surplus  earnings 


of  the  road  in  the  hands  of  a  re- 
ceiver, but  are  entitled  to  cars  and 
other  property  put  on  the  road  by 
the  receiver  to  run  it.  Strang  v. 
Montgomery  &  E.  R.  Co.  3  Woods, 
G13. 


Page  522,  sec.  287. — Receivers'  certificates. 


Issuance. 

The  custody  of  a  contractor  for  the 
building  of  a  telegraph  line,  of  the 
line,  is  not  such  possession  as  will 
prevent  an  order  for  the  issuance  of 
receivers'  certificates  constituting  a 
lien  upon  the  property  of  the  tele- 
graph company  from  taking  efl"ect 
upon  wires  erected  by  such  contract- 
or, where  the  wires  were  furnished 
by  the  company.  Postal  Teleg.  Cable 
Co.  V.  Vane,  o's  U.  S.  App.  319,  80 
Fed.  Rep.  961,  26  C.  C.  A.  342. 

Receivers'  certificates  can  be  law- 
fully issued  only  after  due  notice  to 
all  parties  in  interest  and  after  a  full 
hearing.  Re  Cort,  7  Pa.  Dist.  R. 
536. 

Receivers'  certificates  will  be  is- 
sued only  when  the  expenditure  con- 
templated is  absolutely  necessary  to 
preserve  the  property  from  destruc- 
tion or  serious  injury.     Ibid. 

Receivers'  certificates  will  not  be 
issued  to  pay  part  of  a  lien  against 
the  estate  for  the  purpose  of  obtain- 
ing the  consent  of  the  lien  creditor 
to  an  additional  extension  of  time, 
as  the  matter  of  such  extension  is  in 
the  control  of  the  court  independent 
of  such  consent.     Ibid. 

Receivers'  certificates  will  not  be 
issued  in  the  case  of  business  corpo- 
rations, unless  it  appears  that  there 
are  extraordinary  circumstances  suf- 
ficient to  prompt  the  court  to  take 
such  action.     Ibid. 

Receivers'  certificates  are  issued 
when  necessary.  Central  Trust  Co. 
V.  Tappan,  2  N.  Y.  S.  R.  635,  6  N.  Y. 
Supp.  919. 

Receivers'  certificates  to  pay  In- 
terest on  railroad  bonds  will  not  be 
authorized  where  there  is  a  claim  of 
priority  over  the  bonds  by  many 
creditors.  Newton  v.  Eagle  &  P. 
Mfg.  Co.  76  Fed.  Rep.  418. 


A  receiver  applying  for  leave  to 
issue  receivers'  certificates  should 
fully  state  to  the  court  the  purpose 
for  which  such  certificates  are  to  be 
issued,     ^e  Cort,  7  Pa.  Dist.  R.  536. 

The  court  will  refuse  to  issue  cer- 
tificates for  doubtful  improvements. 
Investment  Co.  v.  Ohio  d  N.  W.  R. 
Co.  36  Fed.  Rep.  48. 

The  court  appointing  a  receiver 
may  authorize  it  to  issue  receiver's 
certificates  to  take  up  outstanding 
tax  certificates  when  it  becomes  ap- 
parent that  it  is  impracticable  for 
the  receiver  to  sell  a  portion  of  the 
land  for  the  purpose  of  redeeming 
from  the  tax  sales  as  contemplated 
by  the  decree  appointing  him,  and 
may  subrogate  the  holders  of  the  re- 
ceiver's certificates  to  the  rights  of 
the  former  owners  of  the  tax  certifi- 
cates. Roby  V.  Title  Guarantee  & 
T.  Co.  166  111.  336. 

The  appellate  court  will  not  dis- 
turb the  decision  of  the  trial  court 
permitting  a  receiver  of  a  railroad 
company  to  issue  receiver's  certifi- 
cates for  the  completion  of  the  road, 
unless  there  has  been  manifest  abuse 
of  discretion, — especially  where  a 
very  large  proportion  of  the  bond- 
holders have  consented  thereto,  and 
the  issuance  of  the  certificates  will 
be  without  prejudice  to  the  bondhold- 
ers who  have  not  consented.  Ruther- 
ford v.  Pennsylvania  M.  R.  Co.  178 
Pa.  38. 

A  court  cannot  authorize  the  is- 
suance of  receivers'  certificates  up- 
on the  property  of  a  private  corpo- 
ration owing  no  duty  to  the  public, 
wliich  shall  be  a  lien  prior  to  tliat  of 
lien  creditors,  without  their  consent. 
Baltimore  lildg.  &  L.  Asso.  v.  Alder- 
son,  90  Fed.  Rep.  142,  32  C.  C.  A.  542. 

The  court  should  not  direct  the  is- 
sue of  receivers'  certificates  and  de- 
cree them  a  paramount  charge  upon 

105 


^  287 


RECEIVERSHIPS— SUPPLEMENT. 


the  franchises,  earnings,  and  prop- 
erty of  corporations  under  its  con- 
trol, but  its  powers  in  that  regard 
should  be  exercised  only  after  due 
notice  to  all  the  parties  in  interest 
and  after  a  full  hearing  as  to  the  ne- 
cessity or  propriety  of  the  expendi- 
ture proposed.  Osborne  v.  Bigstone 
Gap  Colliery  Co.  96  Va.  58. 

A  state  court  has  power  to  author- 
ize the  issuance  of  receivers'  certifi- 
cates for  an  insolvent  corporation  by 
ratifying  the  acts  of  the  Federal 
court  in  accordance  with  an  arrange- 
ment between  the  two  courts  that  a 
receiver  of  the  property  should  be 
appointed  by  the  Federal  court  to  act 
until  it  should  be  determined  wheth- 
er the  state  or  the  Federal  court  had 
jurisdiction,  and  that  the  state  court 
should  ratify  his  acts  if  it  should  be 
determined  that  it,  instead  of  the 
Federal  court,  had  jurisdiction. 
Crosby  v.  Morristoion  d  C.  G.  R.  Go. 
^Tenn.  Ch.  App.)  42  S.  W.  507. 
[Afi"d  by  Sup.  Ct.] 

The  court  can  order  a  receiver  to 
issue  certificates  of  indebtedness,  to 
operate  and  care  for  a  railroad  com- 
pany without  funds.  Central  Trust 
Co.  V.  Tappan,  25  N.  Y.  S.  R.  035,  6 
N.  Y.  Supp.  918. 

Validity  of. 

In  a  proceeding  to  test  the  validity 
of  receivers'  certificates,  the  receiver 
who  holds  the  money  to  pay  them  is 
a  necessarv  party.  Central  Trust 
Co.  v.  Sheffield  &  B.  Coal,  I.  &  R.  Co. 
44  Fed.  Rep.  526. 

On  intervention  relative  to  the 
validity  of  certificates,  the  receiver 
is  a  necessary  party.     Ibid. 

The  right  of  the  holder  of  shares 
in  a  national  bank  which  has  been 
placed  in  the  hands  of  a  receiver,  to 
have  his  share  certificate  rescinded 
for  fraud,  exists  only  where  his 
equity  is  superior  to  that  of  the 
bank, — as,  where  no  credit  was  given 
to  the  bank  after  he  acquired  his 
stock.  Wallace  v.  Hood,  89  Fed. 
Rep.  11. 

Receivers'  certificates  without  con- 
sideration cannot  be  enforced,  either 
at  the  suit  of  the  payee  or  a  holder 
for  value.  Turner  v.  Peoria  &  S.  R. 
Co.  95  111.  134. 
106 


Payment. 

The  matter  of  ordering  the  final 
payment  of  receivers'  certificates  is- 
sued under  the  order  of  a  circuit 
court  which  has  entertained  juris- 
diction of  an  ancillary  suit,  and  of 
determining  what  sums  are  due 
thereon,  with  the  compensation  of 
the  receiver,  will  be  relegated  to  that 
court  by  the  court  in  which  the  orig- 
inal suit  is  brought.  Doe  v.  North- 
western Coal  d  T.  Co.  78  Fed.  Rep. 
62. 

Certificates  are  not  payable  from 
any  particular  fund.  Neafie's  Ap- 
peal (Pa.)   11  Cent.  Rep.  186. 

No  preference  under. 

Persons  taking  receivers'  certifi- 
cates issued  under  order  of  court  not 
making  them  a  prior  lien  to  all  other 
claims,  in  place  of  prior  certificates 
which  are  ordered  to  be  made  such 
prior  lien,  are  not  entitled  to  the 
preference  given  under  the  first  or- 
der. Lewis  V.  Ldnden  8teel  Co.  183 
Pa.  248. 

The  holder  of  certificates  of  de- 
posit issued  by  an  insolvent  national 
bank  is  not  entitled  to  a  preference  in 
funds  in  the  receiver's  hands,  because 
he  presented  the  certificates  for  pay- 
ment before  the  bank  had  closed  its 
doors,  and  the  cashier  was  about  to 
pay  the  same  out  of  the  bank's  funds 
when  he  was  forbidden  by  the  presi- 
dent to  do  so.  St.  Mary's  Church 
v.  National  Bank,  23  Misc.  588. 

The  beneficiary  in  a  certificate  is- 
sued by  a  mutual  aid  association  is 
not  entitled  to  a  preference  in  the  as- 
sets in  the  hands  of  a  receiver  of  the 
association,  by  reason  of  an  assess- 
ment having  been  made  to  pay  the 
certificate,  even  if,  under  the  consti- 
tution and  by-laws  of  the  associa- 
tion, there  was  a  special  application 
of  the  assessment  to  the  payment  of 
the  certificate,  where  the  fund  repre- 
sented by  the  assessment  did  not 
reach  the  receiver's  hands.  People 
V.  Gra7id  Lodge  of  E.  0.  of  M.  A.  156 
N.  Y.  533,  Affirming  88  Hun,  G21. 

Receivers'  certificates  issued  imder 
an  order  which  does  not  give  them 
priority  over  other  liens  are  not  en- 
titled to  a  preference  over  debts  con- 
tracted by  the  receiver  in  carrying 


RECEIVERSHIP  OF  RAILWAYS. 


§  287 


on  the  business  under  an  order  of 
court.  Lewis  v.  Linden  Steel  Co.  183 
Pa.  248. 

Since  the  act  of  1889,  p.  56,  Texas 
receivers'  certificates  have  priority 
over  mortgages.  Ellis  v.  Vernon  Ice, 
Light  c£-  W.  Co.  86  Tex.  109. 

A  lien  of  a  creditor  for  supplies 
furnished  a  collier  company,  which 
has  been  reported  and  confirmed 
without  objection,  and  is  further  se- 
cured under  the  provisions  of  a  trust 
deed  executed  by  the  company  in  fa- 
vor of  its  creditors,  should  not  be 
subordinated  to  receivers' certificates 
issued  under  decrees,  which  the  lien 
claimant  had  no  opportunity  to  re- 
sist. Osborne  v.  Bigstone  Gap  Col- 
liery Co.  96  Va.  58. 

A^o^  negotiable. 

Receivers'  certificates  are  not  ne- 
gotiable as  a  promissory  note,  nor 
assignable  so  as  to  create  a  liability 
against  the  assignor  or  indorser,  nor 
are  they  bills  of  exchange.  McCurdy 
V.  Bowes,  88  Ind.  583. 

Certificates  a  first  lien. 

Effect  should  be  given  to  an  order 
authorizing  the  receiver  of  an  in- 
solvent corporation  to  borrow  money 
on  certificates  which  shall  be  a  first 
lien  on  the  property  and  assets  of 
the  corporation,  by  allowing  the 
sums  borrowed  to  be  paid  out  of  the 
proceeds  of  a  sale  of  the  corporate 
property.  Re  F.  X.  Muller  d  Co.  47 
N.  Y.  Supp.  277. 

Receivers'  certificates  may  be 
made  a  first  lien.  Karn  v.  Rarer 
Iron  Co.  86  Va.  754. 

The  paramount  lien  of  receivers' 
certificates  may  be  recognized  by  a 
mortgage  trustee.  Kent  v.  Lake  Su- 
perior Ship  Canal  R.  &  Iron  Co.  144 
U.  S.  75,  36  L.  ed.  352. 

Purchasers  of  property  on  which 
receivers'  certificates  have  been 
made  a  prior  lien  are  not  permitted 
to  deny  the  validity  of  the  certifi- 
cates. Central  Trust  Co.  v.  Shef- 
field d-  B.  Coal,  I.  &  R.  Co.  44  Fed. 
Rep.  526. 

Receivers'  certificates  for  repairs 
on  road  become  a  first  lien.  Ex  parte 
Mitchell,  12  S.  C.  83. 


Debentures  made  a  lien. 

The  debentures  of  a  receiver,  is- 
sued to  complete  a  railroad,  may  be 
made  a  lien  on  the  road  and  lands  of 
the  company.  Kennedy  v.  St.  Paul 
d  P.  R.  Co.  2  Dill.  448. 

Liability  of  purchaser  for. 

For  liability  of  purchaser  of  a  rail- 
road for  certificates — see  Stevens  V. 
Union  Trust  Co.  57  Hun,  498. 

What  covered  by. 

Strung  wires  are  not  deprived  of 
their  charcter  as  lines  of  telegraph 
within  an  order  directing  receivers' 
certificates  to  be  secured  by  a  trust 
deed  on  all  the  lines  of  telegraph  be- 
tween certain  places,  because  the 
foreman  of  the  contractor  for  their 
erection  had  detached  and  grounded 
them.  Postal  Teleg.  Cable  Co.  v. 
Vane,  53.U.  S.  App.  319,  80  Fed.  Rep. 
961,  26  C.  C.  A.  342. 

Rights  of  holders. 

Certificate  holders  in  a  mutual  in- 
surance association  who  were  mem- 
bers of  a  local  branch  in  another 
state,  the  receiver  of  which  was  pre- 
vented by  the  local  court  from  com- 
plying with  the  order  of  the  court  in 
which  the  principal  receivership  was 
pending  directing  all  local  branches 
and  receivers  to  pay  to  the  principal 
receiver  by  a  certain  date  all  funds 
in  their  hands  or  be  barred  from  re- 
ceiving any  distribution  on  the 
claims  represented  by  them  until  all 
other  claims  had  been  paid, — should 
be  allowed  to  intervene  after  the 
date  specified,  if  the  funds  are  still 
undistributed;  and  share  on  equal 
terms  with  the  other  certificate  hold- 
ers, due  allowance  being  made  for 
any  amount  they  may  have  received 
from  the  local  receiver,  for  the  dif- 
ference, if  any,  between  the  amount  ol 
assessments  paid  by  the  two  classes 
and  for  any  unnecessary  expenses 
incurred  in  the  administration  of  the 
funds  by  the  local  court,  whore  the 
order  is  by  its  own  terms  subject  to 
modification  at  any  time  "as  justice 
may  require,"  and  the  court  has  al- 
ready extended  the  time  in  favor  of 
other  receivers  and  local  branches. 
Cowen  V.  Failey,  149  Ind.  382. 

107 


§§  300,  301 


RECEIVERSHIPS— SUPPLEMENT. 


When  receivers  and  managers  is- 
sue negotiable  obligations,  with  the 
knowledge  and  consent  of  the  parties 
in  interest,  they  are  estopped  as  to 


bona  fide  holders  to  deny  that  they 
are  what  they  purport  to  be.  Lang- 
don  V.  Vermont  &  C.  R.  Co.  53  Vt. 
228. 


Page  526,  sec.  300. — Receivership  in  decedent's  estates. 


Page  527. — (b)  Contest  over  wills. 


A  receiver  may  be  appointed. 
Montgomcnj  v.  Clark,  2  Atk.  378; 
Marr  v.  Liitlavood,  2  Myl.  &  C.  454; 
Jones  V.  Goodrich,  10  Sim.  327;  Wat- 
kins  v.  Bretit,  1  Myl.  &  C.  97 ;  Whit- 
tcorth  V.  Whyddon,  2  Macn.  &  G.  52; 
Podmore  v.  Gunning,  5  Sim.  485. 

Pending  the  probate  of  a  will  the 
court  will  appoint  a  receiver,  but  the 
appointment   of   receivers  elsewhere 


than  in  the  probate  division  is  dis- 
couraged. Re  Parker,  54  L.  J.  Ch. 
N.  S.  694. 

Reversionary    interest    under    icill. 

A  receiver  was  appointed  in  re  a 
wife's  reversionary  interest  imder  a 
will.  Fuggle  v.  Bland,  L.  R.  11  Q. 
ii.  Div.  711. 


Page  528,  sec.  301. — As  to  executors  and  administrators. 


A  court  of  equity  will  not,  as  a 
general  rule,  interfere  with  the  ad- 
ministration of  estates  by  placing 
the  assets  thereof  in  the  hands  of  a 
receiver,  but  it  will,  at  the  instance 
of  heirs  or  the  sureties  upon  the  ad- 
ministrator's bond,  if  there  is  danger 
of  loss  or  other  injury  to  their  in- 
terests, afford  such  extraordinary 
relief  as  may  be  necessary  to  prevent 
the  same.  Thompson  v.  Orser,  105 
Ga.  482. 

A  receiver  will  not  be  appointed  of 
a  decedent's  estate  because  an  execu- 
tor has  become  bankrupt  since  the 
death  of  the  testator,  where  there  is 
a  coexecutor  willing  to  act.  Bowen 
v.  Phillips  [1897]  1  Ch.  174,  66  L.  J. 
Ch.  N.  S.  165. 

In  a  suit  against  executors  for  an 
accounting,  a  receiver  may  be  ap- 
pointed. Bickford  v.  Chalker,  1 
Eng.  L.  &  Eq.  113. 

A  receiver  will  not  be  appointed, 
however,  on  application  of  a  devisee 
under  a  contested  will,  except  in  a 
clear  case  of  right  of  recovery  and 
when  there  is  danger  of  loss.  Clark 
V.  Dew,  1  Russ.  &  M.  103. 

A  receiver  was  appointed  on  ac- 
count of  laches  of  heirs  who  had 
been  substituted  as  trustees  to  exe- 
cute a  devise  to  charity.  Atty.  Gen. 
V.  Bowyer,  3  Ves.  Jr.  714. 

108 


The  court  will  not  interfere,  by  the 
appointment  of  a  receiver,  with  an 
executor,  unless  waste  of  assets  is 
shown.  Re  Wells,  L.  R.  45  Ch.  Div. 
509. 

The  removal  of  an  executor  from 
the  state  of  his  appointment,  leaving 
his  cestui  que  trust  and  the  trust 
estate  behind,  will  justify  the  inter- 
ference of  a  court  of  equity  by  the 
appointment  of  a  receiver  on  the  ap- 
plication of  the  cestui  que  trust, 
Elting  v.  First  Nat.  Bank,  173  111. 
308,  Affirming  68  111.  App.  204. 

A  receiver  may  be  appointed  over  a 
life  estate.  M'Craith  v.  Quin,  Ir. 
Rep.  7  Eq.  324. 

A  receiver  will  not  be  appointed 
of  the  separate  estate  of  a  married 
woman  with  a  restraint  on  anticipa- 
tion, where  the  plaintiff  obtained 
leave  to  enter  final  judgment  for  a 
debt  against  her,  but  delayed  enter- 
ing it  for  three  months,  when  he 
knew  that  arrears  had  just  become 
due,  and  then  entered  judgment  and 
applied  for  a  receiver.  Cohjcr  v. 
Isaacs,  11  L.  T.  X.  S.  198. 

If  a  tenant  for  life  neglects  to 
keep  down  taxes  and  make  necessary 
repairs,  a  receiver  will  be  appointed. 
Murch  V.  ./.  0.  Smith  Mfg.  Co.  47  N. 
J.  Eq.  193. 

The  existence  of  a   suit  to   recall 


RECEIVERSHIP  OVER  TRUST  PROPERTY. 


§  306 


probate  is  not  ground  tor  appoint- 
ing a  receiver.  Newton  v.  Ricketts, 
10  Beav.  525. 

Where  a  husband  was  permitted 
by  trustees  to  receive  rent  belonging 
tc  his  -wife,  and  the  trustees  after- 
wards insisted  on  receiving  it  them- 
selves, the  husband  was  not  entitled 
to  a  receiver.  Wiles  v.  Cooper,  9 
Beav.  294. 

A  receiver  is  not  granted  over  an 
estate,  where  no  grounds  are  shown 
why  an  administrator  could  not  be 
appointed  immediately.  Jones  v. 
Frost,  3  Madd.  1. 

A  receiver  pendente  lite  cannot  be 
appointed  of  the  estate  of  a  testator, 
where  a  caveat  has  been  entered  and 
warned,  and  appearance  has  been  en- 
tered, but  no  writ  has  been  issued. 
Salter  v.  Salter,  65  L.  J.  P.  D.  &  A. 
N.  S.  117  [1896]  P.  291,  75  L.  T.  N. 
S.  7. 

The  administration  of  an  estate  by 
a  receiver  is  not  purely  in  rem,  and 
the  acts  of  the  receiver  and  orders  of 
court  are  not  binding  on  persons  not 
parties.  J.  W.  Dann  Mfg.  Co.  v. 
Farkhurst,  125  Ind.  317. 

In  a  suit  to  carry  into  execution 
the  trusts  of  a  will  a  receiver  will 
not  be  appointed  over  the  lands  in  pos- 


session of  the  heir  at  law,  unless  he 
admits  the  Avill  or  until  it  is  proved 
against  him.  Dobbin  v.  Adams,  8 
Ir.  Eq,  Rep.  157. 

Advance  by  executors  to  the  widow 
of  less  than  half  of  the  cash  on  hand, 
which  was  prima  facie  a  community 
fund,  does  not  authorize  the  appoint- 
ment of  a  receiver  pending  an  action 
by  the  heirs  to  recover  their  alleged 
interest  in  the  estate,  and  for  parti- 
tion, upon  the  ground  of  misapplica- 
tion of  the  funds  and  refusal  to  al- 
low the  plaintiffs  free  access  to  the 
books  of  deceased,  where  the  widow's 
interest  in  the  estate  is  apparently 
largely  in  excess  of  the  amount  paid 
her,  and  she  was  otherwise  without 
means  of  support.  Harris  v.  Hicks, 
13  Tex.  Civ.  App.  134. 

That  one  of  three  executors  of  an 
estate  without  bond  has  been  seen  a 
few  times  playing  cards  for  money 
is  not  sufficient  cause  for  the  appoint- 
ment of  a  receiver  pending  an  action 
by  the  heirs  to  recover  their  alleged 
interest  in  the  estate,  and  for  parti- 
tion, where  a  large  number  of  busi- 
ness and  professional  men  in  the 
community  where  such  executor  lives 
affirm  his  integrity  of  character  and 
his  entire  fitness  for  the  trust.  Ibid. 


Receivership  over  trust  property. 
Page  540,  sec.  306. — Receiver  in  lieu  of  trustee. 


The  general  rule  is  that  a  receiver 
may  be  appointed  in  lieu  of  trustees, 
when  trustees  are  negligent  and 
guilty  of  a  breach  of  duty  as  such. 
Boyd  V.  Murray,  3  Johns.  Ch.  48 ;  Re 
Pontius,  26  Hun,  232 ;  Etowah  Min. 
Co.  V.  Wills  Valley  Min.  &  Mfg.  Co. 
106  Ala.  492;  Newman  v.  Newman, 
2  Bro.  Ch.  92  (Belt's  ed.)  note  7; 
Davis  V.  Browne,  2  Del.  Ch.  188. 

Or  when  creditors  are  entitled  to 
an  estate  over  certain  charges. 
M'Garry  v.  White,  Ir.  L.  R.  16  C.  L. 
322. 

Or  when  a  trustee  goes  out  of  the 
jurisdiction  of  the  court  to  which  he 
is  amenable.  Noad  v.  Backhouse,  2 
Younge  &  C.  Ch.  Cas.  529. 

Or  when  the  unfitness  of  trustees 


is  shown.  Janeway  v.  Green,  16 
Abb.  Pr.  215,  note. 

Or  when  an  action  is  pending  to 
determine  the  distributive  shares. 
Carson  v.  Powers,  52  U.  S.  App.  622, 
sub  nom.  Carson  v.  Combe,  86  Fed. 
Rep.  202,  29  C.  C.  A.  660. 

But  in  the  absence  of  mismanage- 
ment or  incompetency,  a  receiver 
will  not  be  appointed  if  the  trustee 
has  sufficient  power.  Buxton  v. 
Monkhousc,  Coop.  Ch.  41;  Barklcy  v. 
Reay,  2  Hare,  308. 

Nor  where  the  trustee  is  willing  to 
give  security.  Branch  v.  Ward,  114 
N.  C.  148. 

A  receiver  will  not  be  appointi-d  at 
the  suit  of  trustees  upon  a  sliowing 
that  one  to  whom  they  sold  land  has 

109 


§§  310-317 


EECEIVERSHIPS— SUPPLEMENT. 


failed  to  pay  a  large  part  of  the  pur- 
chase money  and  is  insolvent,  but  re- 
mains in  possession  of  the  property, 
receiving  the  profits  thereof,  where 
an  order  of  resale  of  the  premises  di- 
rected by  the  court  remains  unexe- 
cuted by  them,  and  the  defendant  hag 
not  been  heard  in  response  to  the 
application  made.  Anderson  v.  Ce- 
cil, 80  Md.  490. 

"Trustees"  appointed  in  Ohio  to 
wind  up  the  alTairs  and  pay  the  debts 
of  an  insolvent  mutual  fire  insurance 
company  of  that  state,  with  the  gen- 
eral powers  of  receivers  in  Wiscon- 
sin, are  within  Wis.  Laws  1893,  chap. 
293,  requiring  all  foreign  mutual  fire 
insurance  companies  which  have 
been  declared  insolvent  and  of  which 
a  "receiver"  has  been  appointed,  to 
collect  all  claims  from  policy  hold- 
ers within  the  state  for  premiums  or 
assessments  within  six  months  aft- 
er the  passage  of  the  act.  Mansfield 
V.  William  Becker  Leather  Co.  93 
Wis.  656. 


The  court  will  appoint  a  receiver 
over  trust  funds  in  the  hands  of  a 
dc  facto  trustee,  even  if  no  fraud  or 
misconduct  is  shown.  FidcUtij  Ins. 
d  T.  Co.  V.  Uiihcr,  13  Phila.  52. 

A  trustee  invested  with  power  to 
sell  the  property  of  an  insolvent 
corporation  and  to  collect  demands 
due  it  is  properly  appointed  receiver 
to  take  charge  of  its  real  estate  until 
the  validity  of  liens  thereon  can  be 
adjudicated.  Wcigand  v.  Alliance 
Supphj  Co.  44  W.  Va.  133. 

A  receiver  may  be  appointed  in  an 
action  by  a  husband  against  his  wife 
to  enforce  the  terms  of  an  antenup- 
tial contract,  whose  execution  the 
answer  admits,  but  alleges  that  it 
was  procured  by  fraud,  to  collect  the 
rents  of  real  estate  which  the  wife 
covenanted  to  convey  to  a  trustee 
for  the  purpose  of  carrying  out  the 
settlement,  where  the  person  named 
ii!  the  contract  as  trustee  has  refused 
to  act.  De  Rustafjaell  v.  De  Rustaf- 
jacll,  43  W.  N.  C.  56. 


Page  547,  sec.  310. — Lunatics'  estates. 


Where  no  one  can  be  found  to  act 
as  committee  for  a  lunatic  a  receiver 
will  be  appointed.  Ex  parte  Warren, 
10  Ves.  Jr.  G22 ;  Ex  parte  Billing- 
hurst,  1  Ambl.  104. 

The  appointment  of  a  receiver  to 
prevent  the  mismanagement  or  waste 


of  an  alleged  lunatic's  property  dur- 
ing the  pendency  of  a  proceeding  for 
a  commission  de  lunatico  inquirendo 
rests  in  the  sound  discretion  of  the 
court  in  which  the  inquiry  is  pend- 
ing.    Re  MisselwitZy  177  Pa.  359. 


Miscellaneous  receiverships. 
Page  548,  sec.  315. — As  between  vendor  and  vendee. 


WTiere  an  unpaid  vendor  of  land 
taken  by  a  railroad  company  has 
commenced  an  action  to  enforce  his 
lien,  he  is  not  entitled  to  a  receiver 
until  he  gets  judgment,  though  the 
company  admits  its  liability.  Lati- 
mer V.  Aylesbury  &  B.  R.  Co.  L.  R. 
9  Ch.  Div.  385. 


To  collect  taxes. 

Courts  of  equity  have  no  jurisdic- 
tion to  collect  taxes  or  appoint  a  re- 
ceiver for  that  purpose.  Pierce 
County  V.  Merrill,  19  Wash.  175. 


Page  549,  sec.  317. — In  partition  and  between  tenants  in  common. 


Parties  jointly  interested  in  the 
profits  of  a  business  are  entitled  to 
a  receiver  of  the  books  and  papers 
necessary  to  wind  up  the  concern, 
110 


where  it  is  conceded  that  an  account- 
ing is  required.  Davidge  v.  Coe,  22 
Jones  &  S.  360. 

A    tenant  in  common    owning    a 


MISCELLANEOUS  RECEIVERSHIPS. 


§§  318,  320 


third  interest  in  an  ofBce  building 
is  not  entitled  to  a  receiver  in  a  suit 
for  accounting,  where  his  cotenants 
protest  and  there  is  no  showing  of 
fraud,  entanglement  of  accounts,  or 
exclusion  from  a  due  share  of  the  net 
profits.  Kcll  V.  Murdoch,  4  Ohio  N. 
P.  247,  6  Ohio  Dec.  390. 

A  receiver  was  appointed  in  a 
divorce  suit,  of  property  held  under 
agreement  for  joint  occupancy. 
Baggs  v.  Baggs,  55  Ga.  590. 

An  application  by  one  tenant  in 
common  for  a  receiver  was  refused 
where  the  prayer  of  the  bill  for  an 
accounting  and  a  sale  and  division  of 
the  chattels  was  not  sustained  by 
the  evidence.  Blood  v.  Blood,  110 
Mass.  545. 

Tenants  in  common  are  not  en- 
titled to  a  receiver  as  against  an- 
other tenant  in  common,  unless  the 
latter  has  been  excluded.  Giving 
notice  to  tenants  to  pay  to  him  only 
is  not  an  exclusion.  Tyson  v.  Fair- 
dough,  2  Sim.  &  Stu.  142. 

Where  one  in  possession  of  joint 
property  is  insolvent  and  is  collect- 
ing the  rents  and  using  the  same,  a 
receiver  is  proper.  Roche  v.  Roche, 
3  N.  Y.  S.  R.  500. 

Such  ill-will  and  hostility  between 
the  joint  owners  of  property  as  pre- 
vents unity  of  action  in  its  manage- 
ment will  not  warrant  the  court  in 
placing  it  in  the  hands  of  a  receiver. 


when  neither  of  the  o\vners  is  ex- 
cluded from  the  property.  Lamas- 
ter  V.  Elliott,  53  Neb.  424. 

Dissensions  between  two  persons 
who  are  equal  owners  of  the  stock  of 
a  corporation  and  are  also  its  officers 
will  not  justify  the  appointment  of 
a  receiver  so  long  as  no  actual 
wrong  is  committed  by  either  of 
them.  Wallace  v.  Pierce-Wallace 
Puh.  Co.  101  Iowa,  313,  38  L.  R.  A. 
122. 

A  decree  appointing  a  receiver  in 
partition  proceedings  is  an  interloc- 
utory one,  and  it  is  not  reversible 
on  error.  Brachtendorf  v.  Eehm,  72 
111.  App.  228. 

A  receiver  will  not  be  appointed 
in  a  partition  proceeding  where  the 
party  in  possession  is  solvent.  Pierce 
V.  Pierce,  55  Mich.  629. 

And  so  where  the  tenant  in  posses- 
sion is  financially  responsible  and  is 
willing  to  account,  and  no  demand 
has  been  made.  Bathman  v.  Bath- 
man,  79  Hun,  477. 

Strong  hostility  between  the  ten- 
ants in  common,  with  probability  of 
future  injury,  is  ground  for  the  ap- 
pointment. Goldberg  v.  Richards, 
5  Misc.  419. 

A  receiver  in  a  partition  proceed- 
ing may  maintain  suit  against  a  co- 
owner  for  rent  under  a  lease  from 
the  receiver.  Smith  v.  Lavelle,  13 
Misc.  528. 


Page  551,  sec.  318. — In  suits  for  specific  performance. 


In  a  suit  for  specific  performance 
the  receiver  of  the  contracting  party 
is  the  only  necessary  party.  South- 
ern Exp.  Co.  V.  Western  N.  C.  R.  Co. 
99  U.  S.  191,  198,  25  L.  ed.  319,  320. 

A  receiver  and  manager  of  a  hotel 
business  may  be  appointed  in  a  suit 
for  specific  performance  of  a  contract 
for  the  sale  of  the  lease,  furniture, 
and  goodwill  of  the  business,  but  he 
can  take  no  chattels  other  than  those 
which  would  pass  by  an  assignment 


of  the  lease.  Poole  v.  Downes,  76  L. 
T.  N.  S.  110. 

A  receiver  was  appointed  in  a  suit 
for  specific  performance.  Reade  v. 
Hamlin,  02  N.  C.  (Phill.  Eq.)  128; 
Bochm  v.  Wood,  Turn.  &  R.  332,  2 
Jac.  &  W.  236. 

A  receiver  was  appointed  in  case 
of  a  bill  for  specific  performance,  on 
application  of  the  vendor,  where  the 
purchaser  was  insolvent.  Hall  v. 
Jenkinson,  2  Ves.  &  B,  125, 


Page  551,  sec.  320. — In  ejectment  suits. 


A  receiver  will  be  appointed  under 
the  English  judicature  act  1873,  § 
25,  sub.-i.  8,  in  an  ejectment  suit  in 
which  the  title  to  real  property  is  in 


dispute,  where  it  appears  that  the 
plaintiff  will  probably  succeed  in  the 
action,  and  that  tlio  tenants  on  the 
land  will  run  the  risk  of  having  to 

111 


§  321 


RECEIVERSHIPS— SUPPLEMENT. 


pay  their  rents  twice  if  a  receiver  is 
not  appointed.  John  v.  John,  07  L. 
J.  Ch.  N.  S.  (i\Q;  Foxwclly.Van- 
Grutlcn  [1897]  1  Ch.  64,  75  L.  T.  N. 
S.  311,  3U8,  liG  L.  J.  Ch.  N.  S.  53. 

In  a  strong  case  a  receiver  may  be 
appointed.  Gwailcin  v.  Bird,  52  L.  J. 
Q.  B.  N.  S.  2G3;  Whitworth  v.  Wof- 
fori,  73  Ga.  259;  Garniss  v.  San 
Francisco  Super.  Ct.  88  Cal.  413. 

A  receiver  will  be  appointed  of  the 
royalty,  rents,  and  profits  of  min- 
ing property  involved  in  an  action 
of  ejectment,  where  it  is  not  pro- 
posed to  disturb  the  lessee,  and  there 
is  no  direct  legal  responsibility  on 
the  part  of  anyone  to  respond  in 
damages,  and  the  value  of  the  prop- 
erty is  being  greatly  lessened  by  its 
operation,  and  the  defendants  have 
commenced  their  mining  operations 
in  face  of  notices  served  of  the  claim 
of  the  plaintills.  TJlman  v.  Clark, 
75  Fed.  Rep.  868. 

It  has  been  held,  however,  that  a 
receiver  will  not  be  appointed  in  an 
action  to  recover  possession  of  real 


estate.  Guernsey  v.  Powers,  9  Hun, 
78. 

The  discretion  of  the  court  to  ap- 
point a  receiver  in  ejectment  should 
not  be  e.Kercised  where  there  is  no 
evidence  of  waste,  although  de- 
fendant is  impecunious.  Foxtcell  v. 
Van  Grutten  [1897]  1  Ch.  64,  75 
L.  T.  N.  S.  311,  368,  06  L.  J.  Ch.  JSi. 
S.  53. 

And  judgment  must  have  been  ren- 
dered. Durdcll  V.  Burdell,  54  How. 
Pr.  91. 

Where  land  is  sold  by  a  person  to 
a  railroad  company,  and  its  road  is 
constructed  thereon,  and  default  is 
there  made,  it  is  proper  to  appoint 
a  receiver  and  order  possession  to  be 
delivered  to  him.  Munns  v.  Isle  of 
Wight  R.  Co.  L.  R.  5  Ch.  414. 

A  tenant  may  intervene  in  a  re- 
ceivership appointed  in  an  action  of 
ejectment  brought  by  his  landlord 
against  a  person  who  ejected  the  ten- 
ant. Ex  -parte  Breedlove  (Ala.)  24 
So.  363. 


Page  552,  sec.  321. — In  alimony  suits. 


An  action  by  a  wife  for  mainte- 
nance without  a  divorce,  in  which  it 
is  also  sought  to  set  aside  transfers 
made  by  the  husband  to  defeat  plain- 
tiff's rights  to  maintenance  out  of  his 
property,  is  by  reason  of  the  inad- 
equacy of  purely  legal  remedies  so 
much'  a  subject  of  equitable  cog- 
nizance that  it  carries  with  it  the 
right  to  have  a  receiver  appointed 
under  the  general  provision  of  Cal. 
Code  Civ.  Proc.  §  504,  for  the  ap- 
pointment of  receivers  in  all  cases 
"where  receivers  have  been  hereto- 
fore appointed  by  the  usages  of 
courts  of  equity."  Murray  v.  Mur- 
ray, 115  Cal.  266,  37  L.  R.  A.  626. 


Trustees  should  not  be  appointed 
to  take  possession  of  a  husband's 
property  and  close  up  his  estate, 
where  he  has  deserted  his  wife,  re- 
fused to  support  her,  and  has  prop- 
erty which  he  is  about  to  dispose  of 
without  providing  for  her  mainte- 
nance, as  the  attachment  authorized 
in  such  cases  by  the  Pennsylvania 
statute  is  an  original  process  and 
has  no  relation  to  domestic  attach- 
ments or  the  practice  thereunder. 
Longbotham  v.  Longbotham,  18  Pa. 
Co.  Ct.  460. 


Mechanics'  lien. 


Another  ground  for  the  appoint- 
ment of  receivers  is  in  a  mechanic's 
lien  proceeding,  where  by  statute  a 
receiver  is  provided  for. 

An  order  authorizing  a  receiver 
appointed  in  an  action  to  enforce  a 
112 


mechanic's  lien,  to  reduce  the  rental 
under  a  lease  in  force  at  the  time  of 
his  appointment,  is  unauthorized, 
and  he  is  not  entitled  to  a  credit  for 
the  amount  of  the  reduction.  Fice- 
ner  v.  Bott,  20  Ky.  L.  Rep.  632. 


I^nSCELLANEOUS  RECEIVERSHIPS. 


§  321 


A  mechanic's  lien  is  not  lost  by  the 
subsequent  appointment  of  a  receiv- 
er. Totten  d  H.  I.  d  S.  Foundry  Co. 
V.  Muncie  Nail  Co.  148  Ind.  372. 

If  the  appointment  of  a  receiver 
of  a  real  estate  company  devests  the 
creditors  of  the  company  of  all 
rights  to  acquire  a  mechanic's  lien  on 
its  property,  it  will  not  be  a  defense 
available  to  such  company  in  an  ac- 
tion to  enforce  such  a  lien  to  which 
it  is  a  party.  Vigo  Real  Estate  Co. 
V.  Reese,  21  Ind.  App.  20. 

But  in  the  absence  of  a  statute  it 
cannot  be  done. 


The  complainant  in  an  action  to 
foreclose  a  mechanic's  lien  is  not  en- 
titled, in  the  absence  of  any  statu- 
tory provision  therefor,  to  a  receiver 
of  the  rents  and  profits  of  the  prop- 
erty pendente  lite.  Stone  v.  Tyler, 
173  111.  147,  Reversing  07  111.  App. 
17. 

The  fact  that  property  is  in  the 
hands  of  a  receiver  is  no  defense  to 
an  action  to  enforce  a  mechanic's 
lien  against  it.  Richardson  v.  Hick- 
man, 32  Ark.  400. 


In  attachment  suits. 


The  rule  generally  is  that  a  re- 
ceiver will  not  be  appointed  in  an 
attachment  proceeding  unless  the 
attachment  is  inadequate  and  inef- 
ficacious. Pearce  v.  Jennings,  94 
Ala.  524.  But  see  Sackhoff  v.  Vande- 
grift,  98  Ala.  192. 

It  has  been  held,  however,  that  a 
receiver  of  the  property  of  defendant 
in  attachment  is  properly  appointed 


where  the  attached  property  had 
been  mortgaged  to  secure  specified 
debts,  and  the  attachment  plaintiff 
alleges  that  the  most  of  such  debts 
were  fictitious  and  fraudulent  and 
that  the  mortgagor  and  mortgagee 
are  insolvent.  Gassaicay  v.  Heiden- 
heimer  (Tex.  Civ.  App.)  37  S.  W. 
343. 


Appointment  on  application  of  vendor  or  purchaser. 


A  purchaser  at  a  judicial  sale  may 
have  a  receiver  where  the  debtor  re- 
mains in  possession  during  the  re- 
demption period  and  is  insolvent,  in 
case  of  a  mine  where  it  may  be  worked 
out  and  its  value  destroyed.  It  is 
different  from  the  ordinary  real  es- 
tate sale.  Hill  v.  Taylor,  22  Cal. 
191 ;  Harris  v.  Reynolds,  13  Cal.  514, 
73  Am.  Dec.  600. 

A  receiver  should  not  be  appointed 
in  a  suit  by  vendees  to  recover  the 
purchase  money  where  there  is  no 
evidence  of  waste.  Collins  v.  Rich- 
art,  14  Bush,  021. 

A  receiver  will  be  appointed  at  the 
suit  of  a  vendor  seeking  to  rescind 
a  contract  for  the  sale  of  land 
against  a  purchaser  in  possession, 
■where  the  subject-matter  of  the  con- 
tract is  imperiled  bv  the  latter's  acts. 
Cook  v.  Andrews  [1897]  1  Ch.  206,  00 
L.  J.  Ch.  N.  S.  137. 

A  receiver  may  be  appointed  on 
the  application  of  a  purchaser  at  a 


sheriff's  sale  pending  litigation.  Mc- 
Fadden  v.  Nolan,  15  Phila.  187. 

A  purchaser  of  land  at  a  judicial 
sale  is  not  entitled  to  have  a  receiver 
of  the  rents  and  profits  appointed 
pending  an  appeal  by  the  residuary 
legatee  from  a  confirmation  of  the 
sale.  Pearson  v.  Gillcniraters,  99 
Tcnn.  440,  Affirmed  on  Rehearing,  99 
Tenn.  462. 

The  purchaser  at  a  void  judicial 
sale,  who  acquired  and  retained  pos- 
session under  a  receiver  legally  ap- 
pointed, may  offset  against  the  rents 
whatever  credits  the  court  would 
have  allowed  the  receiver  if  he  had 
cultivated  the  land  under  the  court's 
directions,  such  as  taxes,  necessary 
improvements,  etc.  Jefferson  v.  Ed- 
rington,  53  Ark.  545. 

A  purchaser  of  railroad  property 
from  one  who  puichased  at  a  sale  by 
a  receiver  takes  it  free  from  claims 
against  the  receiver,  unless  it  is  or- 
dered otherwise  by  the  terms  of  sale. 

118 


321 


RECEIVERSHIPS— SUPPLEMENT. 


Houston,  E.  tC-  W.  T.  R.  Co.  v.  A'or- 
ris  (Tex.  Civ.  App.)   41  S.  W.  708. 
Under  a  bill  to  set  aside  a  sale  for 


inadequacy  and  fraud  a  receiver  was 
appointed.  Stilwcll  v.  Wilkins,  Jac. 
280. 


Other  parties  and  cases. 


Where  funds  are  in  dispute  it  is 
pro])or  to  appoint  a  receiver  who  may 
apply  for  an  order  to  turn  tlie  money 
into  court,  where  all  parties  can  be 
heard.  People  v.  King,  9  How.  Pr, 
97. 

The  court  may  appoint  a  receiver 
where  property  in  the  possession  of 
one  in  which  another  claims  an  in- 
terest is  allowed  to  depreciate.  Jones 
V.  Qiiayle  (Idaho)  32  Pac.  1134. 

A  receiver  maj'  be  appointed  to 
take  possession  of  and  collect  a  note 
and  mortgage  in  the  hands  of  an  at- 
torney claiming  a  lien  thereon,  upon 
petition  of  a  third  party  claiming 
the  same.  Gary  v.  Brown,  33  111. 
App.  435. 

A  deputy  county  clerk  is  entitled 
to  a  receiver  for  his  portion  of  fees 
earned.  Cheek  v.  TiLley,  31  Ind. 
121. 

Receiver  not  appointed  for  the  an- 
nual allowance  of  assistant  parlia- 
mentary counsel,  there  being  no  fixed 
salary.  Cooper  v.  Reilly,  1  Russ.  & 
M.  500. 

A  judgment  against  a  clergyman 
does  not  create  a  charge  upon  his 
benefice  and  entitle  a  judgment  cred- 
itor to  a  receiver.  Eaiclcins  v.  Gath- 
ercole,  0  De  G.,  M.  &  G.  1,  1  Jur. 
N.  S.  481. 

Where  a  canon  granted  the  profits 
of  his  canonry  as  security  for  money, 
it  appearing  that  no  public  duty  was 
involved,  a  receiver  was  appointed. 
Grenfcll  v.  'Windsor,  2  Beav.  544. 

A  savings  and  loan  association 
containing  a  lottery  feature,  by 
which  certain  shareholders  who  are 
first  paid  will  obtain  an  undue  ad- 
vantage over  the  other  members,  will 
be  restrained  from  proceeding  with 
the  business,  and  a  receiver  of  the 
funds  will  be  appointed  to  distribute 
them  equitably  among  all  the  share- 
holders. Shaio  v.  Interstate  Sav.  L. 
&  T.  Corp.  5  Ohio  N.  P.  411. 

A  court  will  not  appoint  a  receiver 
to  collect  the  fees  of  an  ofiicer 
114 


against  whom  quo  warranto  proceed- 
ings are  pending.  Stone  v.  Wet- 
more,  42  Ga.  001. 

A  receiver  may  be  appointed  to 
reach  a  surplus  in  the  admiralty 
court.  Thompson  v.  Van  Vechten, 
5  Duer,  018. 

In  all  cases  whore  a  creditor  en- 
joins the  debtor  from  disposing  of 
or  interfering  with  his  property  a 
receiver  should  be  appointed  whether 
there  is  such  property  or  not.  IFebft 
V.  Overman,  0  Abb.  Pr.  92 ;  Osborn 
V.  fleyer,  2  Paige,  343. 

Officers  of  a  corporation  ordered 
to  continue  the  operation  of  an  in- 
solvent road  are  special  receivers. 
Ex  parte  Broicn,  15  S.  C.  518. 

Relative  duties  of  employees  and 
receiver  in  case  of  a  strike — dis- 
cussed. Frank  v.  Denver  tC-  R.  G.  R. 
Co.  23  Fed.  Rep.  757,  704. 

A  receiver  may  be  appointed  to 
take  and  state  an  account  of  timber 
cut  from  premises  in  dispute,  even 
where  the  parties  are  solvent.  John 
L.  Roper  Lumber  Co.  v.  Wallace,  93 
N.  C.  23. 

Or  to  preserve  property  where 
there  is  danger  of  an  eviction.  Feth- 
erstone  v.  Mitchell,  9  Ir.  Eq.  Rep. 
480. 

Or  to  prevent  the  lapsing  of  a  land 
grant.  Kennedy  v.  St.  Paul  &  P.  R. 
Co.  2  Dill.  448,  5  Dill.  519. 

Or  over  a  savings  institution. 
Savings  Inst.  v.  Makin,  23  Me.  300. 

Or  where  a  creditor  who  has  a 
right  to  redeem  lias  tendered  the 
amount  required  to  a  mortgagee  in 
possession.  Shultz  v.  Jerrard  (N. 
J.  Eq.)  2  Cent.  Rep.  211. 

A  receiver  may  be  appointed  of 
the  master  forester  of  a  royal  forest. 
Blanchard  v.  Cawthorne,  4  Sim.  500. 

Or  of  deeds  that  are  ordered  to  be 
produced  before  a  master  where  there 
is  a  refusal.  Brigstocke  v.  Mansel, 
3  Madd.  47. 

Or  to  keep  a  cemetery  in  repair  on 
failure  by  a  corporation  as  required 


REMOVAL  AND  DISCHARGE   OF  RECEIVER. 


330 


by  its  charter,  on  application  of  a 
lotowner.  Houston  Cemetery  Co.  v. 
Drew,  13  Tex.  Civ.  App.  536. 

Under  the  provisions  of  Cal.  Code 
Civ.  Proc.  §  564,  authorizing  the 
court  to  appoint  a  receiver  to  carry 
a  judgment  into  effect,  the  court  may 
appoint  a  receiver  to  make  a  convey- 
ance when  the  defendants  are  nu- 
merous and  some  are  minors.  Scad- 
den  Flat  Gold  Min.  Co.  v.  Scadden, 
121  Cal.  33. 

A  receiver  may  be  appointed  to 
rent  premises  until  confirmation  of 
the  title.  Garlington  v.  McKibben, 
99  Ga.  128. 

Or  to  run  a  newspaper  for  a  lim- 
ited term.  Gwynne  v.  Memphis  Ap- 
j)eal-Aialanche  Co.  93  Tenn.  603. 

Or  where  a  judgment  has  been 
confessed  with  a  view  of  defrauding 
creditors.  Stern  v.  Austern,  120  N. 
C.  107. 

Or  for  a  suit  in  a  stock  exchange. 
Habenicht  v.  Lissak,  78  Cal.  351,  5 
L.  R.  A.  713. 

Or  to  collect  money  due  on  mort- 
gage securities.  Sidicay  v.  Ameri- 
can Mortgage  Co.  67  111.  App.  24. 

Or  for  torpedoing  an  oil-well.  Gal- 
lagher V.  Karns,  27  Hun,  375. 

Or  to  collect  taxes  levied  by  judi- 
cial direction,  for  the  payment  of  a 
judgment.  Garrett  v.  Memphis,  5 
Fed.  Rep.  860. 

Or    where    a    stallion    is    owned 


jointly  and  one  joint  owner  is  in  pos- 
session and  is  insolvent.  Shehan  v. 
Maher,  17  Hun,  129;  Andreics  v. 
Betts,  8  Hun,  322. 

But  a  receiver  will  not  be  ap- 
pointed over  a  stand  in  a  market,  it 
being  only  a  license.  Barry  v.  Ken- 
nedy, 11  Abb.  Pr.  X.  S.  421. 

Or  to  preserve  a  jail  on  the  appli- 
cation of  a  taxpayer.  Manly  Mfg. 
Co.  V.  Broaddus,  94  Va.  547. 

Or  of  a  fellowship.  Berkeley  v. 
King's  College,  10  Beav.  602. 

A  receivership  for  a  municipality 
and  its  funds,  and  an  injunction  to 
restrain  its  officers  from  improperly 
paying  out  the  funds,  are  not  proper 
under  a  bill  in  equity  whose  princi- 
pal averment  is  that  the  officers  are 
neglecting  their  duties,  but  which 
does  not  allege  that  irreparable  in- 
jury will  result  therefrom,  or  seek 
by  way  of  mandamus  to  compel  per- 
formance thereof,  and  in  which  the 
complainants  do  not,  as  creditors,  al- 
lege insolvency,  or  that  it  is  necessary 
to  exercise  its  taxing  powers  to  raise 
money  to  pay  debts.  Hurlbut  v. 
Lookout  Mountain  (Tenn.  Ch.  App.) 
49  S.  W.  30i.   [Aff'd  by  Sup.  Ct.] 

Where  two  parties  claim  under  le- 
gal titles  the  validity  of  which  is 
pending  at  law,  a  receiver  will  not  be 
appointed  for  the  rents  and  profits. 
Sqmre  v.  Hewlett,  141  Mass.  597. 


Page  557,  sec.  330. — Removal  and  discharge  of  receiver. 


A  receiver  will  not  be  removed  be- 
cause a  creditor  of  the  insolvent  cor- 
poration is  a  stockholder  and  offi- 
cer of  the  receiver  corporation. 
Barker  v.  Lillibridge  (Mich.)  5  Det. 
L.  N.  250,  75  N.  W.  886. 

The  trusteeship  of  a  receiver  ceases 
on  his  discharge  and  payment  or  de- 
livery of  the  property  in  his  hands 
pursuant  to  the  order  of  court. 
Hovey  v.  Elliott,  118  N.  Y.  124. 

Property  in  the  hands  of  a  receiver 
after  the  bill  is  dismissed  should  be 
restored  to  the  party  from  whom  it 
was  received.  Caswell  v.  Bunch,  80 
Ga.  124. 

Plaintiff  has  a  right  to  dismiss 
his  bill  before  the  receiver  has  passed 
his  accounts  and  paid  in  his  balances. 


White  V.  Westmeath,  Beatty,  174,  2 
Hogan,  33. 

A  receiver  cannot  be  removed  with- 
out notice  of  the  application  for  such 
removal.  Campbell  v.  Spratt,  5  X. 
Y.  Week.  Dig.  25. 

A  receiver  may  be  removed  at  any 
time,  at  the  pleasure  of  the  court, 
under  Conn.  Gen.  Stat.  §  1319;  and 
any  judge  of  the  superior  court  may, 
when  the  court  is  not  actually  in  ses- 
sion, remove  the  receiver  after  due 
notice  given  under  Conn.  Pub.  Acts 
1895,  chap.  499,  §  108.  Re  Premier 
Cycle  .Mfg.  Co.  70  Conn.  473. 

It  is  within  the  discretion  of  the 
circuit  court  to  fix  tlio  tinie  for  iioar- 
ing  a  petition  for  the  removal  of  a 
receiver.     Barker       v.       Lillibridge 

115 


§  330 


RECEIVERSHIPS— SUPPLEMENT. 


(Mich.)  5  Det.  L.  N.  250,  75  N.  W. 
886. 

A  motion  to  discharge  must  be  on 
notice.  Johnson  v.  Henderson,  8  Ir. 
Eq.  Kcp.  521. 

A  receiver  may  be  discharged  on 
motion  when  his  functions  under  tlie 
bill  have  ceased.  Baughman  v.  Cal- 
averas County  Super.  Ct.  72  Cal.  572. 

Receivers  having  executed  the 
duty  for  which  they  were  appointed, 
it  is  the  right  and  duty  of  the  party 
on  wliose  application  they  are  ap- 
pointed to  see  to  it  that  they  are  dis- 
charged, in  order  to  avoid  the  con- 
sequences of  their  continuing  to  act. 
Langdon  v.  Vermont  &  C.  It.  Co.  53 
Vt.  228. 

A  provision  of  an  order  discharg- 
ing the  receiver  of  a  corporation, 
making  the  restoration  of  the  prop- 
erty to  the  corporation  subject  to 
the  debts  incuri-ed  by  him,  applies 
onlj'  to  such  of  the  debts  as  could  be 
legally  enforced  against  the  trust 
property.  Briinner  v.  Central  Glass 
Co.  18  Ind.  App.  174. 

A  receiver  may  be  removed  for  dis- 
obeying orders  of  the  court.  Guard- 
ian iS'or.  Inst.  v.  Bowling  Green  Sav. 
Bank,  05  Barb.  275. 

The  payment  of  the  judgment  on 
which  supplementary  proceedings 
are  based  renders  the  further  acts 
of  the  receiver  as  such  null  and  void. 
Eighton  v.  Pruden,  73  N.  C.  01. 

if  the  balance  is  to  be  paid  into 
court,  the  same  order  may  discharge 
the  recognizance;  but  if  to  be  paid 
to  a  person,  it  should  not.  Lawson 
V.  Rickctts,  11  Beav.  627. 

When  a  corporation  satisfies  a 
chancellor  that  it  is  able  and  willing 
to  resume  operation  of  its  road,  the 
receiver  will  be  ordered  to  deliver  it 
up.  Re  Long  Branch  &  Hea  Shore  R. 
Co.  24  N.  J.  Eq.  398. 

Power  to  remove  is  in  the  discre- 
tion of  the  court.  First  Nat.  Bank 
V.  E.  T.  Bnrnum  Wire  &  Iron  Works, 
60  Mich.  487. 

An  equitable  action  for  injunction 
and  the  appointment  of  a  receiver  is 
completely  ended  by  a  consent  order 
by  which  the  receiver  is  discharged 
and  tlie  property  in  his  hands  re- 
stored to  the  defendants.  Conquest 
V.  yational  Bank.  97  Ga.  500. 

An    order    appointing    a   receiver 

116 


and  putting  the  land  in  suit  in  his 
hands  pending  the  action  should,  in 
the  absence  of  special  circumstances, 
be  rescinded  upon  dismissal  of  the 
action.  Campbell  v.  Ever  sole,  18  Ky. 
L.  Rep.  723. 

A  receiver  appointed  in  a  mort- 
gage foreclosure  action  is  properly 
discharged  and  the  possession  of  the 
lot  restored  to  the  owner  of  the 
equity  of  redemption,  who  is  also  en- 
titled to  the  balance  of  the  rents  left 
in  the  receiver's  hands  after  paying 
the  taxes,  where  the  mortgagee  has 
purchased  the  property  for  the 
amount  of  the  decree,  interest,  and 
costs,  notwithstanding  that  the  ap- 
plication to  discharge  is  contested 
by  a  third  person  who  was  liable  for 
the  mortgage  debt,  and  who  induced 
the  mortgagee  to  purchase  the  prop- 
erty by  agreeing  to  reimburse  him 
and  take  over  the  property.  Bogard- 
us  V.  Moses,  78  111.  App.  223. 

The  trial  judge  is  not  confined,  on 
an  application  for  the  removal  of  a 
receiver,  to  the  receiver's  disobedi- 
ence of  an  order  set  up  in  the  peti- 
tion as  the  ground  for  removal, 
■where  the  receiver  in  his  answer  sets 
forth  the  whole  history  of  his  man- 
agement from  the  beginning,  and  af- 
firms that  he  has  never  intentional- 
ly done  or  omitted  any  act  prejudi- 
cial to  the  interests  committed  to  his 
charge,  and  has  never  disregarded 
any  order  of  the  court,  and  the  reply 
to  such  answer  is  a  general  denial. 
Re  Premier  Cycle  Mfg.  Co.  70  Conn. 
473. 

Though  after  decree,  if  the  receiv- 
er is  not  discharged  thereby,  he  is 
still  receiver.  Visage  v.  Schofield, 
60  Ga.  680. 

A  decree  of  the  Federal  court,  dis- 
charging receivers  appointed  by  it, 
is  a  bar  to  any  suit  against  such  re- 
ceivers for  liability  incurred  solely 
by  virtue  of  their  office,  and  consti- 
tutes a  complete  defense.  Fordyce 
V.  Beecher,  2  Tex.  Civ.  App.  29. 

The  granting  of  an  order  to  put  a 
purchaser  in  possession  is  ipso  facto 
a  discharge  of  the  receiver  as  to  the 
land  covered  by  the  order.  Ponson- 
by  v.  Ponsonby,  1  Hogan,  321. 

Discontinuance  of  the  suit  does 
not  discharge  the  receiver.  White- 
side V.  Frendergast,  2  Barb.  Ch.  471. 


CLAIMS  AGAINST  RECEIVERSHIP  FUNDS. 


§  340 


A  receiver  of  a  corporation  should 
not  be  discharged  and  ordered  to 
turn  over  the  property  to  an  assignee 
subsequently  appointed  by  the  court 
of  another  county,  in  advance  of  a 
hearing  upon  the  merits.  France  v. 
Peerless  Refining  Co.  15  Ohio  C.  C. 
232. 

A  receiver  who  presents  his  resig- 
nation will  be  relieved  from  further 
administration  of  the  trust,  but  will 
not  be  discharged  until  his  accounts 
have  been  duly  passed  and  any  sums 
with  which  he  is  surcharged  have 
been  paid,  llorehead  v.  Striker,  82 
Fed.  Rep.  1003. 

A  bill  to  set  aside  a  conveyance  as 
fraudulent  should  not  be  dismissed 
without  requiring  a  receiver  ap- 
pointed in  the  action  to  report  and 
settle  his  account.  Simmons  v. 
Shelton,  112  Ala.  284. 

A  stockholder  and  bondholder  of  a 
mining  company,  petitioning  for  the 
removal  of  a  receiver  on  the  ground 
of  mismanagement  and  waste,  will 
be  permitted  to  examine  the  mines 
by  an  agent  in  whom  he  confides,  for 
the  purpose  of  seeing  if  the  grounds 
upon  which  he  bases  his  petition  are 
well  founded.  Eenszey  v.  Langdon- 
Eenszy  Coal  llin.  Co.  80  Fed.  Rep. 
178. 

Dismissal  of  a  bill  does  not  dis- 
charge the  receiver.  State,  Peterson, 
V.  Gibson,  21  Ark.  140. 

The  dismissal  of  the  bill  does  not 
discharge  the  receiver  from  his  ac- 
countability to  the  court.  State, 
Peterson,  v.  Gibson,  21  Ark.  140. 

A  motion  to  dismiss  and  discharge 
the  receiver  held  over  until  right  to 


taxes  determined.  Hazard  v.  Credit 
Mobilier  of  America,  38  Fed.  Rep. 
195. 

A  receiver  wrongfully  appointed 
over  property  will  be  discharged  not- 
withstanding the  abatement  of  the 
suit.  Lavender  v.  Lavender,  Ir.  Rep. 
9  Eq.  593. 

Alter  a  receiver  has  been  ap- 
pointed and  has  given  bond  he  must 
show  some  reasonable  cause  to  en- 
title himself  to  be  discharged. 
Sinith  v.  Vaughan,  Ridgeway 
*.  Hardw.  251. 

A  receiver  of  a  corporation  ap- 
pointed for  mismanagement  of  direct- 
ors should  be  discontinued  on  the  re- 
moval of  such  mismanaging  direct- 
ors, when  the  dissolution  of  the  cor- 
poration is  not  sought.  Duncan  v. 
George  C.  Treadwell  Co.  82  Hun, 
376. 

The  bondsman  of  a  receiver  will 
not  upon  his  resignation  be  made  a 
party  to  the  action  in  which  he  was 
appointed,  but  will  be  given  notice 
that  his  accounts  are  being  investi- 
gated, and  allowed  to  take  part  in  the 
investigation.  Morehead  v.  Striker, 
82  Fed.  Rep.   1003. 

A  bank  is  estopped  from  endeavor- 
ing to  secure  the  discharge  of  a  re- 
ceiver, where  it  has  accepted  divi- 
dends, and  suffered  entries  to  be 
made  authorizing  the  continuance  of 
the  business  and  a  sale  of  the  prop- 
erty by  the  receiver,  without  objec- 
tion, and  where  it  prays  payment  of 
its  claim  out  of  the  proceeds.  Equi- 
table Xat.  Bank  v.  Guckenherger,  5 
Ohio  X.  P.  319. 


Page  568,  sec.  340. — Claims  against  receivership  funds. 


The  funds  in  the  hands  of  the  re- 
ceiver should  be  paid  out  only  on  or- 
der of  court.  Duffy  v.  Casey,  7  Robt. 
79. 

Where  an  order  requiring  a  re- 
ceiver to  pay  out  more  money  than 
he  is  likely  to  have  has  been  entered 
by  mistake,  it  may  be  amended  by 
summary  action  or  by  tlie  court  on 
its  own  motion.  Ryon  v.  Thomas, 
104  Ind.  .59. 

It  is  error,  after  the  expiration  of 


the  term  of  court  at  which  the  decree 
was  rendered,  to  modify  a  decree 
which  in  effect  adjudged  certain  par- 
ties to  be  the  owner  of  funds  in  pos- 
session of  or  to  be  collected  by  a  re- 
ceiver, directing  that  the  same  be 
paid  to  them,  to  redocket  the  cause, 
and  enter  an  order  which  in  eM'cct  di- 
rects tlie  funds  to  be  paid  to  one  ol 
sudi  parties,  ignoring  tlie  rights  of 
the  other.  Fanning  v.  Fanning,  173 
111.  83. 

117 


§  340 


RECEIVERSHIPS— SUPPLEMENT. 


Authority  given  to  receivers  to  ad- 
just, compromise,  and  settle  in  their 
best  discretion  claims  against  a  rail- 
road company,  vests  no  right  in  cred- 
itors to  have  their  claims  paid  in 
full.  Mercantile  Trust  Co.  v.  Bal- 
timore c6  0.  B.  Co.  79  Fed.  Rep.  CS9. 

A  loss  after  the  appointment  of  a 
receiver  does  not  entitle  the  claim- 
ants to  share  in  the  distribution  of 
assets.  Doane  v.  Milh-'ille  Mut.  M. 
d-  F.  Ins.  Co.  43  K  J.  Eq.  522. 

An  order  directing  that  no  pay- 
ment of  claims  shall  be  made  by  a  re- 
ceiver without  order  of  the  court 
does  not  cut  off  claims  of  the  class 
covered  thereby,  where  the  claimants 
are  not  parties  to  the  proceeding. 
Xetc  England  R.  Co.  v.  Carnegie 
Steel  Co.  33  U.  S.  App.  491,  75  Fed. 
Rep.  54,  21  C.  C.  A.  219. 

Heirs  who  have  inherited  stock  in 
a  corporation  are  not  entitled  to  an 
allowance  by  a  receiver  for  services 
rendered  in  preserving  the  property 
before  his  appointment,  since  their 
services  were  in  the  interest  of  their 
own  inheritance.  Re  Osceola  Mill- 
ing Co.  76  Mo.  App.  23. 

\Yhen  a  suit  is  brought  to  a  con- 
clusion by  settlement,  the  money  in 
the  receiver's  hands  belongs  to  the 
person  in  possession  of  the  estate 
when  the  receiver  was  granted. 
Faynter  v.  Carew,  Kay,  Appx. 
xxxvi. 

Neither  a  railroad  company  nor 
one  in  privity  with  it  can  demand 
the  income  in  the  hands  of  a  receiver 
to  pay  liens,  until  they  have  been 
satisfied.  Schutte  v.  Florida  C.  R. 
Co.  3  Woods,  G92,  712. 

Pledgees  of  bonds  entitled  to  share 
in  the  funds  in  the  hands  of  a  re- 
ceiver of  a  corporation,  who  have 
bought  in  such  bonds  upon  a  sale, 
are  entitled  to  the  full  face  value,  and 
not  merely  to  the  amount  for  which 
they  were  pledged.  Atlantic  Trust 
Co.  V.  Woodbridge  Canal  &  Irrig.  Co. 
86  Fed.  Rep.  975. 

Le\'7  of  writ  of  attachment 
against  insolvent  railroad  company 
gives  the  attaching  creditor  no  pref- 
erence or  lien  which  will  deprive  the 
court  of  the  power  to  equitably  ap- 
portion the  income  of  the  property 
under  a  receiver  appointed  in  pro- 
ceedings to  foreclose  a  mortgage,  to 
118 


the  operating  expenses  of  the  road. 
Farmers'  &  M.  Nat.  Bank  v.  Waco 
Electric  R.  &  L.  Co.  (Tex.  Civ.  App.) 
30  S.  W.  131. 

The  court  may  apply  a  balance  of 
rents  in  the  receiver's  hands  to  the 
satisfaction  of  a  second  mortgage 
after  the  payment  of  the  first. 
Keogh  v.  McManus,  34  Ilun,  521. 

A  corporation  whose  checks  dur- 
ing the  illness  of  its  treasurer  are, 
without  further  authority  from  such 
treasurer  than  a  direction  to  the 
clerk  of  another  company  in  which 
he  was  a  stockholder  to  turn  one 
such  check  into  the  funds  of  the  lat- 
ter company,  taken  possession  of  by 
the  latter  company,  and  the  proceeds 
used  in  bujing  goods  in  the  regular 
course  of  business,  may,  where  the 
latter  company  becomes  insolvent  and 
goes  into  the  hands  of  a  receiver,  re- 
cover from  such  receiver  the  amount 
of  the  checks  so  used.  York  v.  York 
Market  Co.   (N.  H.)   37  Atl.  103S. 

Where  plaintiff  was  appointed  re- 
ceiver, with  power  to  repair  and  pay 
taxes,  and  subsequently  a  mortga- 
gee foreclosed  and  bought  the  prop- 
erty for  less  than  his  mortgage  and 
a  balance  remained  in  plaintiff's 
hands, — held  that  he  was  not  re- 
quired to  pay  it  over  to  the  mortga- 
gee.    Ranney  v.  Peyser,  83  N.  Y.  1. 

For  a  question  as  to  what  parties 
were  entitled  to  a  fund  in  the  hands 
of  receivers — see  Lanauze  v.  Belfast, 
H.  d  B.  R.  Co.  Ir.  Rep.  3  Eq.  454. 

A  claim  against  a  construction 
company  is  not  payable  from  the 
funds  in  the  hands  of  a  receiver  of 
a  railroad  company  whose  stock  is 
all  owned  by  the  construction  com- 
pany. Exchange  Bank  v.  Macon 
Construction  Co.  97  Ga.  1,  siih  nom. 
McTighe  v.  Macon  Construction  Co. 
33  L.  R.  A.  800. 

After  insolvency  and  the  appoint- 
ment of  a  receiver  for  a  railroad,  the 
court  in  a  foreclosure  proceeding 
may  direct  payment  of  a  reasonable 
amount  for  land  taken  for  a  right  of 
way  and  included  in  the  mortgage. 
Coe  V.  New  Jersey  Midland  R.  Co. 
30  N.  J.  Eq.  21. 

The  conduct  of  a  real-estate  broker 
in  concealing  from  a  receiver  who 
had  employed  him  to  procure  a  pur- 
chaser for  land,  his  own  interest  in 


CLAIMS  AGAINST  RECEIVERSHIP  FUNDS. 


§  340 


the  prospective  purchase,  precludes 
him  from  obtaining  compensation 
from  the  latter.  Ryan  v.  Kahler 
(Tex.  Civ.  App.)  46  S,  W.  71. 

Policy  holders  in  an  employers' 
liability  insurance  company,  in  a 
state  whose  statutes  require  the  de- 
posit as  security  of  a  certain 
amount  for  the  benefit  of  all  the  pol- 
icy holders  residing  therein  before 
such  company  can  do  business  there- 
in, are  entitled  to  share  in  the  dis- 
tribution of  dividends  by  the  receiver 
of  the  company  only  after  the  policy 
holders  in  other  states  have  received 
sums  equal  to  the  amounts  secured 
to  such  first-mentioned  policy  hold- 
ers by  such  deposit.  Ross  v.  Ameri- 
can Employers'  Liability  Ins.  Co.  56 
N.  J.  Eq.  41. 

In  distributing  the  proceeds  of  a 
crop  in  the  hands  of  a  reciver  in  a 
partition  suit,  a  cropper  under  a  co- 
tenant  who  was  in  sole  possession 
should  be  allowed  the  proportion 
called  for  by  his  contract,  subject  to 
a  porportional  deduction  for  the  ex- 
penses of  the  receiver  in  harvesting 
and  marketing  the  crop,  and  the  bal- 
ance, after  deducting  a  reasonable 
compensation  to  such  cotenant  for 
the  use  of  his  teams  and  seed  and 
machinery  furnished  by  him,  should 
be  divided  between  the  several  co- 
tenants,  each  share  bearing  its  due 
proportion  of  the  receivership. 
Moreland  v.  Strong,  115  Mich.  211. 

Assets  of  a  national  bank  in  the 
hands  of  a  receiver  are  under  the 
comptroller  of  the  currency,  and  the 
receiver  has  no  power  to  pay  divi- 
dends. Merrill  v.  National  Bank, 
41  U.  S.  App.  529,  sub  nom.  Merrill 
V.  First  Nat.  Bank,  75  Fed.  Rep.  148, 
21  C.  C.  A.  282. 

A  suit  to  compel  the  receiver  of  a 
national  bank  to  pay  certain  assets 
is  one  arising  under  the  laws  of 
the  United  States  within  the  mean- 
ing of  the  acts  of  March  3,  1887,  and 
August  13,  1888,  i-egarding  the  juris- 
diction of  Federal  courts.  8wope  v. 
Villard,  61  Fed.  Rep.  417. 

An  agreement  between  two  cor- 
porations, that  if  one  of  them  would 
extend  the  time  of  payment  of  its 
claim  from  a  third  corporation  such 
claim  should  be  paid  in  full  before 
any  payment  should  be  made  or  de- 


manded on  a  claim  by  the  second 
corporation,  made  at  the  solicitation 
of  the  third  corporation  and  for  its 
benefit,  entitles  the  first  corporation, 
on  the  appointment  of  a  receiver  of 
the  property  of  the  third  corpora- 
tion and  the  proof  by  the  first  and 
second  corporations  of  their  respec- 
tive claims,  to  the  dividends  on  the 
claim  of  the  second  corporation  until 
the  claim  of  the  first  corporation  is 
paid  in  full,  but  does  not  entitle  it 
to  have  paid  to  it  the  proceeds  of 
certain  collateral  transferred  to  the 
second  corporation  before  such  agree- 
ment was  made.  Plymouth  Cord- 
age Co.  V.  Seymour,  07  Minn.  311. 

The  assignee  of  half  of  a  claim  is 
entitled  to  his  share  of  dividend. 
Todd  v.  Meding,  56  N.  J.  Eq.  83. 

Rents  not  charged  with  the  pay- 
ment of  petitioner's  claim  will  not  be 
ordered  turned  over  to  him.  Balti- 
more V.  Chase,  2  Gill   &  J.  376. 

The  amount  collected  on  claims 
due  a  corporation,  by  its  bookkeeper 
under  an  agreement  between  the  cor- 
poration and  a  bank  that  the  claims 
shall  be  set  aside  and  used  to  reim- 
burse the  bank  for  advancements,  and 
as  a  matter  of  convenience  shall  be 
collected  by  the  bookkeeper  and  be 
under  his  control,  is  impressed  with 
an  equitable  trust  in  favor  of  the  bank 
as  against  a  receiver  of  the  corpora- 
tion. Atlantic  Trust  Co.  v.  Carbon- 
dale  Coal  Co.  99  Iowa,  234. 

Wages  of  an  injured  employee 
may  be  paid  by  receiver  if  the  em- 
ployee is  deserving.  Thomas  v.  East 
Tennessee,  V.  &  G.  R.  Co.  60  Fed. 
Rep.  7. 

The  state  is  not  entitled  to  a  pref- 
erence, either  under  the  Minnesota 
statutes  or  the  rules  of  equity,  to  the 
funds  in  the  hands  of  a  receiver  of  an 
insolvent  trust  company  which  had 
wrongfully  converted  and  mingled 
with  its  own  funds  and  those  of 
other  creditors  funds  which  it  had 
collected  as  an  assignee  of  an  insol- 
vent bank  and  whicli  it  should  under 
an  order  of  the  court  have  applied 
to  a  preferred  claim  of  the  state, 
where  none  of  the  funds  so  collected 
by  the  trust  company  ever  came  into 
tiie  hands  of  its  receiver;  but  the 
state  is  entitled  to  file  a  claim 
against    the    receiver    as    a    general 

119 


§  340 


RECEIVERSHIPS— SUPPLEMENT. 


creditor.  Re  Receivership  of  North- 
ern Trust  Co.  70  Minn.  334. 

Funds  of  a  mutual  benefit  associa- 
tion are  properly  distributed  by  the 
receiver.  Farmers'  Loan  &  T.  Co.  v. 
Aberle,  19  App.  Div.  79,  Modifying 
18  Misc.  257. 

State  laws  cannot  control  the 
rights  of  creditors  to  participate  in 
the  distribution  by  a  receiver  ap- 
pointed in  a  Federal  court.  London 
<&  S.  F.  Bank  v.  Willamette  Steam- 
Mill,  Lumbering,  &  Mfg.  Co.  80  Fed. 
Rep.  22U. 

The  assets  in  New  York  of  a  Con- 
necticut corporation,  collected  by  re- 
ceivers appointed  in  New  York  by  a 
Federal  court,  will  be  first  applied 
to  the  protection  of  the  New  i'ork 
creditors  before  distribution  ratably 
among  the  general  creditors.  Sands 
V.  E.  S.  Greeley  &  Co.  80  Fed.  Rep. 
195. 

One  who  has  sold  personal  prop- 
erty to  a  corporation  cannot,  after 
the  corporate  property  has  been 
placed  in  the  hands  of  a  receiver  by 
a  valid  order  of  the  court,  obtain  a 
lien  or  benefit  under  Sand.  &  H. 
(Ark.)  Dig.  §§  4727,  4728,  provid- 
ing a  method  for  impounding  the 
property  to  prevent  the  purcliaser 
from  disposing  of  it.  Ilalpern  v. 
Clarendon  Hardwood  Lumber  Co.  64 
Ark.  132. 

The  surplus  proceeds  of  a  vessel 
seized  by  a  Federal  court  for  satis- 
faction of  maritime  liens  should  be 
paid  to  a  receiver  appointed  in  an- 
other state  and  operating  the  vessel, 
and  not  to  creditors  having  no  liens. 
The  Willamette  Valley,  7G  Fed.  Rep. 
838. 

Trust  funds  in  the  hands  of  a  re- 
ceiver may  be  recovered  after  a  par- 
tial dividend  where  there  still  remains 
sufficient  to  pay  the  claim,  though 
the  specific  money  is  no  longer  in 
the  hands  of  the  receiver.  Standard 
Oil  Co.  V.  Hawkins,  46  U.  S.  App. 
115,  74  Fed.  Rep.  39.5,  20  C.  C.  A. 
468,  33  L.  R.  A.  739. 

As  between  creditors,  funds  in  the 
hands  of  receivers  are  to  be  dis- 
tributed on  a  basis  of  equality.  Re 
Waddell-Entz  Co.   67   Conn.  324. 

The  receiver  cannot  divert  the 
property  from  creditors  and  stock- 
holders of  one  corporation  to  the 
120 


creditors  and  stockholders  of  an- 
other company.  J.»ies  v.  Union  P. 
R.  Co.  74  Fed.  Rep.  335. 

The  payments  made  out  of  a  fund 
b}'  the  attorney  of  a  judguient  credit- 
or as  receiver,  under  orders  of  the 
court  and  without  notice  to  the  exe- 
cution creditor,  cannot  be  considered 
as  consented  to  by  such  creditor. 
Boice  V.  Conover,  54  N.  J.  Eq.  531. 

Assets  may  be  sold  for  the  benefit 
of  the  parties  interested.  Grif/ith 
v.  Tower  Publishing  Co.  75  L.  T.  N. 
S.  330. 

A  mortgagee  having  a  deficiency 
decree  against  a  corporation  in  the 
hands  of  a  receiver  is  entitled  to  a 
dividend.  Re  Simpson,  36  App.  Div. 
562. 

A  lessor  of  a  bank  may,  in  the  in- 
voluntary insolvency  proceedings  in- 
stituted against  it  under  Minn.  Gen. 
Stat.  1894,  chap.  76,  have  allowed  as 
a  claim  the  damages  he  has  sustained 
by  reason  of  the  repudiation  by  its 
receiver  of  its  executory  contract  of 
leasing,  and  its  abandonment  of  the 
premises.  Minneapolis  Base  Ball 
Co.  V.  City  Bank,  70  N.  W.  1024. 

No  trust  arises  as  to  amounts  in 
the  hands  of  a  receiver  realized  upon 
collaterals  pledged  to  secure  a  note, 
which  were  redelivered  to  the  bor- 
rower for  collection  as  they  matured, 
and  paid  over  to  the  lender  as  pay- 
ments on  the  note,  and  mingled  with 
the  latter's  funds,  although  the  lat- 
ter fraudulently  sold  and  indorsed 
the  note  to  a  third  person  as  wholly 
unpaid,  and  such  person  received  the 
same  without  know^ledge  that  it  was 
secured  by  collateral  or  of  the  pay- 
ment of  such  collateral.  Merchants' 
Nat.  Bank  v.  Allemania  Bank,  71 
Minn.  477. 

Where  a  mortgage  of  chattels  by 
reason  of  defectiveness  creates  no 
lien,  unsecurded  creditors  share 
equally  with  the  mortgagees.  Sligh 
V.  Shelton  S.  W.  R.  Co.  20  Wash.  16. 

The  allowance  of  claims  by  a  re- 
ceiver is  not  conclusive.  United 
States  Trust  Co.  v.  United  States  F. 
Ins.  Co.  18  N.  Y.  199. 

There  should  be  no  distribution  by 
a  receiver  until  the  rights  of  parties 
are  determined.  Doane  v.  Corbin, 
44  111.  App.  463. 

In  the  management  by  a  receiver 


CLAIMS  AGAINST  RECEIVERSHIP  FUNDS. 


§  340 


of  several  consolidated  railroads,  the 
accounts  of  the  subdivisions  should 
be  kept  separate  and  the  earnings  of 
each  made  to  pay  its  own  expenses,  if 
possible.  Central  Trust  Co.  v.  Wa- 
bash, m.  L.  d  P.  B.  Co.  23  Fed.  Rep. 
863. 

The  Georgia  Code,  regulating  the 
collection  and  distribution  of  assets 
by  a  receiver  of  a  bank,  in  an  action 
for  its  dissolution,  does  not  apply  to 
a  case  of  voluntary  assignment  under 
the  statute.  Foiiche  v.  Brower,  74 
Ga.  251. 

The  owner  of  bonds  having  a  lien 
on  a  railroad  may  attack  the  validity 
of  other  claims  sought  to  be  made 
equal  to  or  superior  to  his  own  claim. 
Farmers'  tC-  J/.  Is! at.  Bank  v.  Waco 
Electric  R.  d  Light  Co.  (Tex.  Civ. 
App.)   36  S.  W.  131. 

Money  expended  for  various  pur- 
poses for  the  benefit  of  the  mort- 
gagees are  not  charges  on  the  earn- 
ings as  between  mortgagees  and  gen- 
eral creditors  entitled  to  be  paid  out 
of  the  earnings  of  the  corporation 
while  in  the  hands  of  a  receiver. 
Randolph  v.  Farmers'  Loan  d  T. 
Co.  91  Tex.  605,  Reversing  41  S.  W. 
113. 

A  claim  for  a  rebate  under  a  con- 
tract made  by  a  superintendent  of  a 
road  in  the  hands  of  a  receiver 
should  be  paid  out  of  the  receiver's 
fund.  Ex  parte  Benson,  18  S.  C.  38, 
44  Am.  Rep.  564. 

Borrowed  money  for  an  insolvent 
railroad  should  be  paid  out  of  fund 
in  court.  Ex  parte  Carolina  Nat. 
Bank,  18  S.  C.  289. 

The  day  on  which  the  insolvency 
of  a  corporation  whose  business  was 
the  indemnifying  of  creditors  for 
losses  incurred  on  credit  sales  oc- 
curred, as  adjudged  by  the  order  ap- 
pointing a  receiver,  fixes  the  time 
to  which  the  several  claims  of  credit- 
ors must  be  referred  for  adjustment. 
Gray  v.  Reynolds,  55  N.  J.  Eq.  501. 

One  who  moves  for  leave  to  file  a 
claim  with  a  receiver  appointed  in 
proceedings  instituted  under  Minn. 
Gen.  Stat.  1894,  chap.  76,  alleging  in 
his  moving  papers  that  the  time  fixed 
by  the  decree  for  filing  has  expired, 
but  asking  relief  on  the  ground  of 
excusable  neglect,  cannot  shift  hia 
position  on  appeal  and  contend  that 


the  time  within  which  claims  are  re- 
quired to  be  exhibited  had  not  ex- 
pired because  the  provisions  of  § 
5911  were  not  observed  by  the  court 
in  making  the  order  fixiiig  the  time. 
Hove  V.  Bankers'  Exch.  Bank 
(Minn.)  77  N.  W.  967. 

The  respective  rights  of  creditors 
of  a  corporation  for  which  a  receiver 
has  been  appointed  under  the  general 
equity  powers  of  the  court  will  be 
adjusted  as  of  the  date  of  the  ap- 
pointment of  the  receiver,  and  not  of 
the  filing  of  the  bill,  where  no  in- 
junction issued  upon  the  filing  of 
the  bill,  and  the  corporation  con- 
tinued its  business  as  usual,  and 
those  who  dealt  with  it  in  the  in- 
terim did  so  without  being  influenced 
by  the  fact  that  the  suit  was  pend- 
ing, and  no  attachments  or  other 
liens  were  placed  upon  the  property 
in  the  interim.  Jones  v.  Arena  Pub- 
lishing Co.  171  Mass.  22. 

A  bona  fide  purchaser  of  a  valid 
claim  against  a  corporation  is  en- 
titled to  a  dividend  from  its  receiver 
upon  the  entire  face  value  of  the 
claim,  although  purchased  for  a  less 
amount.  Dinimick  v.  W.  Fred 
Quimby  Co.   (N.  J.  Eq.)   41  Atl.  101. 

A  receiver  may  hear  and  allow 
claims  before  the  expiration  of  the 
time  provided  for  by  statute.  Bis- 
sell  V.  Heath,  98  Mich.  472. 

Where  receivers  of  a  railroad 
have  all  its  property  in  their  hands, 
and  all  proceedings  are  required  to 
be  and  are  had  in  the  one  cause  for 
the  purpose  of  establishing  tiie  rights 
of  all  the  claimants,  whether  the  re- 
ceivers are  technically  made  parties 
to  every  proceeding  for  establishing 
rights  to  the  property,  or  not,  is  im- 
material. Grand  Trunk  R.  Co.  v. 
Central  Vermont  R.  Co.  88  Fed.  Rep. 
022. 

The  receiver  of  a  credit  sj'stem  in- 
surance company  stands  in  the  place 
of  the  company  as  to  the  allowance 
or  disallowance  of  claims  accruing 
before  the  insolvency  of  the  company 
and  his  appointment  as  receiver,  and 
may  by  liis  conduct  waive  the  re- 
quirement of  a  policy  as  to  the  time 
of  furnishing  proofs  of  loss,  in  the 
same  manner  as  the  company  might 
have  done.  Gray  v.  Blum,  55  N.  J. 
Eq.  553. 

131 


§  340 


RECEIVERSHIPS— SUPPLEMENT. 


A  judgment  recovered  against  a 
railroad  coniijany  for  injuries  to 
land  from  the  construction  of  a  track 
in  a  street,  after  the  appointment  of 
a  receiver  for  the  company  but  in  an 
action  commenced  before  his  ap- 
pointment, will  be  classified  as  a 
claim  of  the  sixth  class,  under  Tex. 
Rev.  Stat.  1895,  art.  1472,  where  the 
application  to  have  it  classilied  was 
made  before  the  sale  of  the  property 
of  the  railway  company  by  the  re- 
ceiver, and  no  amendment  of  the  ap- 
plication was  made  setting  up  the 
sale,  or  showing  that  the  proceeds 
thereof  were  in  the  receiver's  hands. 
VoUnicr  v.  San  Antonio  &  G.  S.  B. 
Co.  (Tex.  Civ.  Ai)p.)  47  S.  W.  378. 

An  ollicer  of  a  corporation  who 
files  a  petition  to  establish  its  in- 
solvency may  prove  his  claim  before 
receivers.  Grinnell  v.  Merchants 
Ins.  Co.  16  N.  J.  Eq.  283. 

Claims  arising  by  virtue  of  the 
•death  of  the  insured  before  the  filing 
of  a  bill  for  the  appointment  of  a  re- 
ceiver, but  not  proved  and  allowed 
before  that  time,  are  comprehended 
by  the  word  "accrued"  in  Mass.  Stat. 
1890,  chap.  421,  §  14,  providing  that 
when  an  assessment  insurance  com- 
pany shall  discontinue  business  a  re- 
ceiver may  be  appointed  to  adminis- 
ter any  portion  of  the  emergency 
funds,  which  shall  be  used  first  in 
the  payment  of  accrued  claims  on 
certificates  or  policies.  Atty.  Gen. 
V.  Massachusetts  Ben.  Life  Asso.  171 
Mass.  193. 

A  claim  filed  with  a  receiver  of  a 
corporation  by  a  nonresident  credit- 
or, with  an  express  reservation  or 
condition  that  by  filing  it  he  does  not 
intend  to  abandon  any  rights  gained 
by  reason  of  an  attachment  suit 
previously  brought  in  another  state, 
does  not  estop  the  creditor  from  pur- 
suing the  attachment.  Linvillc  v. 
Eadden,  88  Md.  594,  43  L.  R.  A.  222. 

The  statute  of  limitations  does 
not  run  in  favor  of  a  receiver  of  a 
dissolved  corporation  against  a  claim 
not  barred  at  the  time  of  his  ap- 
pointment, so  long  as  the  receiver- 
ship is  open  and  continuing.  Lud- 
ington  v.  Thompson,  153  N.  Y.  499, 
Affirming  4  App.  Div.   117. 

Citing  Ex  parte  Ross,  2  Glyn  &  J. 
4G,  330;  Minot  v.  Thacher,  7  Met. 
123 


348,  41  Am.  Dec.  444 ;  Parker  v.  San- 
horn,  7  Gray,  191;  Kirkpatrick  v. 
McElroy,  41  N.  J.  Eq.  555. 

Labor  claims  not  reduced  to  judg- 
ment are  not  the  basis  for  a  bill  in 
ciumcery.  Putman  v.  Jacksonville, 
L.  iG  St.  L.  R.  Co.  01  Fed.  Rep.  440. 

Where  a  receiver  is  discharged  and 
the  property  turned  back,  a  judg- 
ment against  the  receiver  is  con- 
clusive as  to  the  amount  and  exist- 
ence of  a  claim.  Garrison  v.  Texas 
&  P.  R.  Co.  10  Tex.  Civ.  App.  130. 

Earnings  of  a  railroad  and  light 
company  before  the  appointment  of  a 
receiver  in  proceedings  to  foreclose 
a  mortgage,  which  were  applied  to 
the  partial  extinguishment  of  the 
mortgage  debt,  or  invested  in  better- 
ments or  improvement  of  the  mort- 
gage security,  or  were  on  hand  when 
the  receiver  was  appointed,  may  in 
the  discretion  of  the  court  be  applied 
to  claims  that  arose  for  operating  ex- 
penses or  were  necessary  or  proper 
to  preserve  the  property  before  the 
appointment  of  the  receiver.  Farm- 
ers' {£■  M.  Nat.  Bank  v.  Waco  Electric 
R.  &  Light  Co.  (Tex.  Civ.  App.)  36 
S.  W.  131. 

The  receiver  of  an  insolvent  bank 
has  no  authority  to  allow  or  disal- 
low the  claims  of  creditors;  and 
where  he  allows  some,  and  pays  a 
dividend  thereon,  disallowing  others, 
the  court  may  allow  the  latter,  and 
order  the  same  dividend  to  be  first 
paid  out  of  the  stockholders'  double 
liability,  under  the  Minnesota  stat- 
ute, and  order  the  distribution  of  the 
balance  to  all  the  creditors  pro  rata. 
Palmer  v.  Bank  of  Zumbrota,  05 
Minn.  90. 

Mortgagees  of  railroad  property 
cannot  insist  that  funds  properly  ap- 
plicable to  unpaid  claims  should  be 
withheld  from  them  and  applied 
upon  the  mortgage,  because  the  re- 
ceivers have  paid  claims  which  were 
not  proper  charges  upon  the  funds 
in  their  hands,  and  which  might 
have  been  applied  in  reduction  of  the 
claims  remaining  unpaid.  Grand 
Trunk  R.  Co.  v.  Central  Vermont  R. 
Co.  88  Fed.  Rep.  G20. 

In  the  allowance  of  claims  the  re- 
ceiver has  no  power  to  waive  rules 
of  law  applicable  to  policies  and  by- 


CLAIMS  AGAINST  RECEIVERSHIP  FUNDS. 


§340 


laws.  Evans  v.  Trimountain  Mut. 
F.  his.  Co.  9  Allen,  329. 

The  decision  of  a  receiver  as  to 
the  admission  of  a  claim  is  not  final. 
Bank  of  Bethel  v.  Pahquioque  Bank, 
14  Wall.  383,  suJj  nom.  First  Kat. 
Bank  v.  National  Pahquioque  Bank, 
20  L.  ed.  840. 

One  who  purchases  from  a  bank 
shares  of  its  stock  cannot  recover  the 
price  paid  therefor  from  the  receiver 
of  the  bank,  on  the  ground  that  his 
purchase  was  induced  by  fraud,  until 
he  has  established  his  claim  in  an 
action  at  law  against  the  bank.  Wal- 
lace V.  Hood,  89  Fed.  Rep.  11. 

The  breach  of  a  contract  of  employ- 
ment by  an  insolvent  corporation 
entitles  the  claimant  to  no  more  thaa 
any  other  general  creditor.  The 
claim  is  not  wages.  Spader  v.  Mural 
Decoration  Mfg.  Co.  47  N.  J.  Eq.  18. 

The  receiver  of  a  mutual  insur- 
ance company  cannot  allow  losses  oc- 
curring after  the  entry  of  the  decree 
of  forfeiture  of  charter.  Insai-ance 
Commissioner  v.  Commercial  Mut. 
Ins.  Co.  20  R.  I.  7. 

General  creditors  of  a  railroad 
who  bring  suit  to  have  the  corpora- 
tion wound  up  as  insoh'ent  and  to 
have  a  receiver  appointed  cannot 
claim  that  expenditures  made  by  the 
receiver  out  of  the  income  in  satisfac- 
tion of  preferential  claims  should  be 
charged  to  the  mortgagees  where 
they  were  made  parties  to  the  suit 
and  the  foreclosure  of  the  mortgage 
sought,  and  even  if  they  were  not 
properly  made  parties  the  expendi- 
tures were  essential  to  the  preserva- 
tion of  the  railroad  system,  without 
which  substantial  earnings  for  the 
benefit  of  the  creditors  would  not 
have  been  possible.  liuhlender  v. 
Chesapeake,  0.  &  8.  W.  B.  Co.  91 
Fed.  Rep.  5,  33  C.  C.  A.  299. 

A  judgment  by  default  for  want  of 
an  answer,  entered  against  a  cor- 
poration in  an  action  to  recover  on  a 
contract  for  the  payment  of  money 
only,  instituted  after  the  assets  had 
been  sequestrated  and  a  receiver  ap- 
pointed under  Minn.  Gen.  Stat.  1894, 
chap.  70,  for  the  benefit  of  all  its 
creditors,  is  not  entitled  to  be  ex- 
hibited and  allowed  as  a  claim 
against  the  estate,  without  further 
proof  of  the  existence  and  bona  fide 


character  of  the  claim  on  which  it  is 
based.  Danforth  v.  National  Chemi- 
cal Co.  68  Minn.  308. 

Judgment  entered  after  the  ap- 
pointment of  receivers  and  the  issu- 
ing of  an  injunction  restraining  in- 
terference with  the  property  of  the 
corporation  do  not  become  liens 
upon  the  real  estate  of  the  corpora- 
tion not  embraced  in  the  mortgage, 
to  foreclose  which  the  suit  is  brougiit 
and  in  which  the  receivers  were  ap- 
pointed, where  such  suit  is  also  a 
general  creditors'  bill  for  liquida- 
tion, although  such  judgments  are 
entered  before  the  receivers'  bonds 
are  perfected  by  approval.  Temple 
V.  Glasgoio,  42  U.  S.  App.  417,  80 
Fed.  Rep.  441,  25  C.  C.  A.  540,  Citing 
Maynard  v.  Bond,  67  Mo.  315;  Dis- 
tinguishing Frayser  v.  Richmond  & 
A.  R.  Co.  81  Va.  388;  Edtvards  v. 
F.du-ards,  L.  R.  2  Ch.  Div.  291; 
Moran  v.  Sturges,  154  U.  S.  250, 
38  L.  ed.  981. 

A  receiver  of  a  mutual  insurance 
company  may  recognize  claims  filed 
with  the  company  in  the  same  man- 
ner as  is  required  by  the  decree, 
though  they  have  never  been  pre- 
sented to  him  according  to  the  de- 
cree, if  he  is  satisfied  that  they  are 
just.  Insurance  Commissioner  v. 
Commercial  Mut.  Ins.  Co.  20  R.  I.  7. 

A  receiver  authorized  to  pay  divi- 
dends on  claims  proved  to  his  satis- 
faction is  justified  in  making  pay- 
ment to  a  creditor  who  filed  a  claim 
establishing  an  indebtedness  evi- 
denced by  a  chattel  mortgage  and 
four  promissory  notes  of  the  corpo- 
ration, and  stating  that  the  claim 
was  presented  on  her  own  behalf,  as 
well  as  on  the  behalf  of  one  to  whom 
a  half  interest  in  the  indebtedness 
had  been  assigned  as  collateral  se- 
curity, which  assignee  filed  a  claim 
upon  another  promissory  note,  and 
made  no  mention  of  his  interest  na 
assignee.  Mcding  v.  Todd,  50  N.  J. 
Eq.  820. 

The  validity  of  a  director's  claim 
against  a  corporation  cannot  be 
questioned  by  its  receiver  in  a  pro- 
ceeding to  secure  the  possession  of 
money  paid  into  court  under  a  judg- 
ment in  the  director'.s  favor,  where, 
upon  opening  the  judgment  and  per- 
mitting the  receiver  to  defend,  judg- 

123 


§  340 


s 


RECEIVERSHIPS— SUPPLEMENT. 


nient  is  recovered  against  him.  Ten- 
nant  v.  Appleby  (N.  J.  Eq.)  41  Atl. 
110. 

One  to  whom  a  claim  against  an 
insolvent  corporation  has  been  as- 
signed in  part  as  collateral  security, 
but  who  liled  no  claim  in  respect 
thereto,  cannot  hold  the  receiver  li- 
able for  a  dividend  paid  thereon  up- 
on satisfactory  jjroof,  to  the  assign- 
or, on  the  ground  that  he  is  charge- 
able with  notice  of  the  interest  of  the 
assignee  from  circumstances  extrin- 
sic to  the  proofs  on  file.  Meding  v. 
Todd,  56  N.  J.  Eq.  820. 

Judgments  which  were  liens  at  the 
time  of  the  appointment  are  to  be 
paid  in  full.  Coican  v.  Pennsyl- 
vania Plate  Glass  Co.  184  Pa.  1. 

Under  statutes  giving  a  certain 
class  of  judgments  against  a  lessee 
of  a  railroad  a  prior  lien  upon  roll- 
ing stock,  but  not  upon  the  lease- 
hold, earnings  of  a  receiver  ap- 
pointed under  a  general  creditors' 
bill  will  be  distributed  to  such  judg- 
ments in  the  proportion  which  the 
rolling  stock  bears  to  the  property 
of  the  lessee,  including  rolling  stock 
and  leasehold.  Thomas  v.  Cincin- 
nati, 'N.  0.  d  T.  P.  It.  Co.  91  Fed. 
Eep.  202. 

Liens  upon  the  entire  property  of 
an  insolvent  debtor  in  the  hands  of  a 
receiver  appointed  under  the  Georgia 
traders'  act,  which  are  superior  to 
a  mortgage  on  a  portion  of  the  prop- 
erty, antedating  the  filing  of  the  pe- 
tition, must  be  paid  out  of  the  fund 
arising  from  the  sale  of  the  property 
other  than  that  covered  by  the  mort- 
gage before  resorting  to  the  proceeds 
of  the  mortgaged  property  to  the 
prejudice  of  the  mortgagee,  and,  if 
the  surplus  arising  from  the  sale  be- 
yond the  amount  necessary  to  pay 
off  the  mortgage  is  not  sufficient  to 
meet  them,  the  fund  necessary  to  j  :iy 
the  mortgage  can  only  be  diminished 
to  the  extent  that  the  general  fund 
is  deficient.  Bradford  v.  Cooledye, 
103  Ga.  753. 

The  action  of  a  receiver  in  allow- 
ing claims  is  prima  facie  binding  on 
the  members.  Sands  v.  Hill,  42 
Barb.  651. 

An  agreement  by  the  receiver  of  a 
corporation,  although  made  without 
permission  of  the  court,  to  pay  an 
124 


execution  creditor  of  the  corporation 
for  the  amount  of  his  judgment  from 
the  proceeds  of  property  levied  up- 
on and  afterwards  turned  over  to 
such  receiver  in  consideration  of  hav- 
ing such  property  transferred  to  him, 
will  be  enforced.  People  v.  Xation- 
al  Alut.  Ins.  Co.  19  App.  Div.  247. 

Receivers  representing  both  the 
creditors  of  a  corporation  and  the 
corporation  itself  may  assert  any  de- 
fense to  a  claim  against  the  corpo- 
ration to  wliich  creditors  are  en- 
titled, although  the  corporation  is 
itself  estopped.  Hamor  v.  Taylor- 
Rice  Engineering  Co.  84.  Fed.  Rep. 
392. 

A  receiver  of  a  corporation  as  the 
representative  of  its  creditors  is  not 
estopped  to  claim  that  a  contract  of 
conditional  sale,  or  chattel  mortgage, 
w'as  not  properly  recorded,  by  a  re- 
cital in  such  instrument.  Ke  Wil- 
cox d  U.  Co.  70  Conn.  220. 

jNIoneys  realized  on  executions 
must  first  be  allowed  before  distri- 
bution. Third  ?\~at.  Bank  v.  Weaver, 
73  111.  App.  403. 

The  fair  value  of  goods  at  the  time 
of  attachment,  although  they 
brought  less  than  their  value  at 
sheriff's  sale,  must  be  accounted  for 
before  the  creditor  can  share  in  the 
benefit  of  a  receivership  in  another 
state  in  which  the  attachment  is  not 
recognized  as  valid.  Ward  v.  Con- 
necticut Pipe  Mfg.  Co.  71  Conn.  345, 
42  L.  R.  A.  700. 

A  creditor  with  notice  of  the  pend- 
ency of  a  winding-up  suit  is  not  en- 
titled to  share  in  the  distribution 
without  a  surrender  of  whatever  ad- 
vantage he  may  have  obtained  by  at- 
tachment in  another  state.  Ward  v. 
Connecticut  Pipe  Mfg.  Co.  71  Conn. 
345,  42  L.  R.  A.  706. 

A  bank  in  another  state  is  not  pre- 
cluded from  participating  in  the  dis- 
tribution by  a  receiver  appointed  in 
Minnesota  of  the  assets  of  an  insolv- 
ent indorser  of  a  note  held  by  it  be- 
cause after  the  receiver's  appoint- 
ment it  attached  a  deposit  held  by 
it  to  the  credit  of  the  indorser,  since 
no  attachment  proceedings  were  nec- 
essary to  protect  it  as  to  the  deposit, 
as  it  had  the  right  upon  the  insolv- 
ency of  the  indorser  to  retain  the 
deposit  and  offset  the  note  against 


CLAIMS  AGAINST  RECEIVERSHIP  FUNDS. 


340 


the  same.  Mercantile  Nat.  Bank  v. 
Macfarlane,  71  Minn.  497. 

A  creditor  whose  claim  has  been 
presented  late  is  entitled  to  receive, 
before  further  dividends  are  declared 
to  other  creditors,  the  same  propor- 
tion of  its  claim  as  other  creditors 
have  received  on  their  claims.  Lon- 
don d  S.  F.  Bank  v.  Willamette 
Steam-Mill  Lumbering  &  Mfg.  Co.  80 
Fed.  Rep.  220. 

The  right  to  present  an  account 
for  allowance  in  receivership  is  not 
prejudiced  by  having  put  it  into 
judgment  in  another  state.  Ward 
V.  Connecticut  Pipe  Mfg.  Co.  71 
Conn.  345,  42  L.  E.  A.  70G. 

Order  to  present  claims. 

An  order  requiring  all  claims  to 
be  presented  to  the  court  within  a 
certain  time  does  not  bar  recovery 
of  a  claim  against  the  company, 
though  not  presented  within  the 
timer  Texas  P.  R.  Co.  v.  Bloom,  23 
U.  S.  App.  143,  60  Fed.  Rep.  979,  9 
C.  C.  A.  300. 

It  is  the  duty  of  the  court  of  its 
own  motion  to  direct  all  creditors  to 
come  and  prove  their  claims  against 
the  corporation;  and  any  sufficient 
statement  of  the  nature  and  amount 
of  the  debt  due  such  a  creditor  is 
good  though  it  does  not  conform  to 
the  technical  requirements  of  a 
pleading.  Biddle  Purchasing  Co.  v. 
Port  Toioisend  Steel  Wire  &  Nail  Go. 
16  Wash.  681. 

Creditors  of  an  assignor  for  cred- 
itors whose  assignee  was,  on  his  ap- 
plication, appointed  receiver  by  the 
chancery  court  upon  the  commence- 
ment of  attachment  actions  against 
the  assignor  and  the  levj^  of  the  at- 
tachment upon  the  assigned  prop- 
erty, are  not  guilty  of  laches  in  fail- 
ing to  present  their  claims  to  the  re- 
ceiver until  after  the  latter  has 
made  his  report,  where  the  attach- 
ment suits  have  not  been  abandoned, 
or,  if  abandoned,  no  notice  has  been 
given  to  creditors  to  present  their 
claims  and  prove  the  same.  Taylor 
V.  Moore,  C4  Ark.  23. 

The  rule  that  creditors  of  an  in- 
solvent corporation  may  come  in  at 
any  time  before  final  distribution  by 
the  receiver  and  have  a  new  account 
at  their  own   expense  does   not  ap- 


ply where  the  court  has  ordered  that 
all  claims  shall  be  presented  within 
a  time  specified,  and  that  the  fund 
in  the  receiver's  hands  shall  be  ap- 
plicable solely  to  the  payment  of 
such  claims  as  shall  be  presented 
within  that  time.  Abraham  v.  Mer- 
cantile Trust  d  Dep.  Co.  86  Md.  254. 

An  order  limiting  the  time  for  pre- 
sentation of  claims  against  the  as- 
sets of  a  corporation  will  not  bar  a 
claim  to  a  trust  fund  which  does  not 
constitute  part  of  the  assets.  New 
York  Security  d-  T.  Co.  v.  Lombard 
Investment  Co.  75  Fed.  Rep.  172. 

A  notice  requiring  all  persons  hav- 
ing claims  or  demands  against  the 
receiver  of  a  railroad  appointed  by  a 
Federal  court,  to  present  them  to  a 
special  master  within  a  given  time, 
does  not  preclude  the  prosecution  to 
final  judgment  of  a  pending  action 
against  the  receiver  in  a  state  court. 
Erb  V.  Popritz,  59  Kan.  264. 

Nonresident  claimants  to  funds  in 
the  hands  of  a  receiver  of  an  insol- 
vent corporation  have  no  greater 
rights  or  privileges  in  respect  to  fil- 
ing their  claims  after  the  time  al- 
lowed for  that  purpose  by  the  court 
than  residents  have,  and  they  are 
equally  bound  with  the  latter  by  the 
publication  of  a  notice  for  presen- 
tation of  claims  within  the  time  lim- 
ited. Abraham  v.  Mercantile  Trust 
d  Deposit  Co.  86  Md.  254. 

The  limitation  of  the  time  for  fil- 
ing a  lien  for  supplies  against  a  cor- 
poration under  the  Virgina  Code 
ceases  to  run  at  the  filing  of  a  gener- 
al creditors'  bill  under  which  a  re- 
ceiver is  appointed;  and  a  lien  filed 
after  the  expiration  of  the  ninety 
days  allowed  is  in  time  where  such 
creditors'  bill  was  filed  in  time. 
Ibid. 

The  court  cannot  allow  a  claim 
against  an  insolvent  corporation, 
which  has  not  been  presented  to  the 
receiver  in  writing  under  oath,  as 
required  by  the  New  Jersey  corpora- 
tion act  1896,  §  76.  Blake  v.  Domes- 
tic Mfg.  Co.  (N.  J.  Eq.)  41  Atl.  376. 

An  application  for  leave  to  pre- 
sent a  chiiin  to  tlie  receiver  of  an  in- 
solvent corporation,  made  more  than 
four  years  after  the  expiration  of 
the  time  fixed  by  an  order  of  the 
court  for  prcsentiition  of  claims,  is 

125 


§  341 


RECEIVERSHIPS— SUPPLEMENT. 


properly  refused,  where  the  question 
as  to  the  existence  of  the  corpora- 
tion, as  distinct  from  anotlier  corpo- 
ration, upon  which  tlic  applicant 
bases  his  right  to  relief,  has  been  in- 
volved in  litigation  for  about  three 
years,  of  which  fact  the  petitioner 
might  have  known  if  he  had  made 
any  inquiries  about  his  claim.  Ibid. 
Where  a  Federal  court  appointed 
a  receiver  of  a  railroad,  and  ordered 
that  all  claims  should  be  by  inter- 
vention in  the  receivership  proceed- 
ing before  a  certain  date,  a  claim 
which  accrued  during  the  receiver- 
ship and  was  not  j^resented  before 
the  Federal  court  within  the  time 
allowed  was  barred.  Dillingham  v. 
Kelly,  8  Tex.  Civ.  App.  113. 

Funds  distributed  pro  rata. 

A  reserve  fund  of  a  mutual  benefit 
association  on  insolvency  and  ap- 
pointment of  a  receiver  is  distributed 


proportionately  among  all  creditors, 
irrespective  of  residence.  Garliam 
V.  Mutual  Aid  Soc.  IGl  Mass.  357. 

The  net  profits  realized  by  receiv- 
ers in  the  operation  of  the  business 
of  a  corporation  may  be  by  order  of 
court  apportioned  to  mortgagees  and 
general  creditors.  Lehman  Bros.  v. 
Tallussce  Mfg.  Co.  64  Ala.  5t>7. 

A  decree  in  favor  of  judgment 
creditors,  setting  aside  fraudulent 
confessions  of  judgments  and  trans- 
fers of  property  by  a  firm,  will  not 
appoint  a  receiver  and  direct  the  ap- 
plication of  the  property  and  its  pro- 
coeds  to  the  payment  of  the  com- 
plainant's judgments,  where  a  re- 
ceiver lias  been  appointed  in  an  ac- 
tion for  the  dissolution  of  the  firm; 
but  the  property  realized  from  such 
judgments  and  transfers  will  go  to 
such  receiver,  and  be  distributed 
among  the  creditors  pro  rata.  Met- 
calf  V.  Moses,  22  Misc.  GG4. 


Page  572,  sec.  341. — Character  of  claims  allowed. 


Attorney  and  counsel  fees. 

A  reasonable  charge  of  an  attor- 
ney for  services  which  benefit  all  the 
creditors  will  be  paid  out  of  the 
funds  in  the  hands  of  a  receiver  for 
distribution.  Wcigand  v.  Alliance 
Supply  Co.  44  W.  Va.  133. 

A  partner  of  a  receiver  of  an  in- 
solvent corporation  may  be  allowed 
a  sum  as  compensation  for  legal  serv- 
ices rendered  as  counsel  to  the  re- 
ceiver, where  the  latter  is  not  to 
share  in  such  compensation.  Re 
Simpson,  36  App.  Div.  562. 

Intervening  creditors  who  file  an 
independent  petition  asking  the 
court  to  direct  the  sale  of  certain 
property  of  an  insolvent  corporation, 
-which  still  remains  undisposed  of  in 
the  hands  of  a  receiver  of  such  cor- 
poration who  has  been  duly  ap- 
pointed, are  not  entitled  to  an  al- 
lowance of  counsel  fees  out  of  the 
general  fund  or  out  of  the  fund  real- 
ized from  the  sale  of  such  property, 
as  it  was  already  in  the  hands  of  the 
receiver  under  the  original  proceed- 
ings. G.  Ober  cG  Sons  Co.  v.  Macon 
Constr.  Co.  100  Ga.  G35 
126 


Taxes. 

After  a  bank  has  become  insolvent 
and  passed  into  the  hands  of  a  re- 
ceiver, the  receiver  cannot  be  com- 
pelled to  pay  taxes  assessed  upon  the 
shares  of  stock.  Stapyllon  v.  Thag- 
gard,  91  Fed.  Rep.  93,  33  C.  C.  A. 
353. 

A  receiver  may  be  directed  to  pay 
an  assessment  levied  upon  the  prop- 
erty in  his  possession,  although  it  is 
not  shown  that  there  are  sufficient 
funds  in  his  hands  to  pay  the  tax  in 
question.  Wiswall  v.  Kunz,  173  111. 
110. 

Where  the  county  has  acquired  no 
lien  for  taxes  on  personal  property 
which  has  passed  into  the  hands  of  a 
receiver  pending  litigations  of  liens 
more  than  sufficient  to  absorb  the 
property,  the  county  has  no  claim. 
Howard  County  v.  Strother,  71  Iowa,. 
083. 

When  propertj'  in  the  hands  of  a 
receiver  is  not  taxable.  Brooks  v. 
Hartford,  61  Conn.  112. 

When  receiver  should  pay  fran- 
chise tax.  Re  George  Mathers  Son's 
Co.  52  N.  J.  Eq.  607. 


CLAIMS  AGAINST  RECEIVERSHIP  FUNDS. 


§  341 


When  receiver  is  not  liable  for 
franchise  tax.     Ibid. 

The  lien  of  the  state  for  taxes  has 
priority  over  the  equitable  claim  of 
a  creditor.  Re  Columbia  Iiis.  Co. 
3  Abb.  App.  Dec.  239. 

The  property  in  the  hands  of  a  re- 
ceiver is  bound  for  taxes.  He  can 
appeal  to  the  court  if  the  tax  is  in- 
valid. Ex  parte  Chamberlain,  55 
Fed.  Rep.  704. 

A  petition  in  the  same  suit  for  an 
injunction  is  the  proper  remedy  to 
prevent  a  sale  for  taxes  of  property 
in  the  hands  of  a  receiver.  Virginia, 
T.  &  C.  ateel  &  I.  Go.  v.  Bristol  Land 
Co.  88  Fed.  Rep.  134. 

Taxes  are  not  superior  to  an  at- 
tachment lien  subject  to  which  prop- 
erty was  placed  in  the  hands  of  a 
receiver.  Re  Atlas  Iron  Constr.  Co. 
19  App.  Div.  415. 

The  court  of  primary  jurisdiction 
of  a  receivership  will  follow  the  de- 
'cision  of  the  local  Federal  court  in 
ordering  the  receiver  to  pay  local 
taxes,  that  such  taxes  are  not  irregu- 
lar and  constitute  a  lien  upon  the 
property.  Fletcher  v.  Harney  Peak 
Titi-Min.  Co.  84  Fed.  Rep.  555. 

Funds  in  the  hands  of  a  receiver 
are  liable  to  taxation  though  col- 
lected in  other  states.  Schmidt  v. 
Faileij,  148  Ind.  150,  37  L.  R.  A.  442. 
Moneys  in  the  hands  of  a  receiver 
will  not  be  directed  applied  to  the 
payment  of  taxes  for  the  year  in 
which  the  property  was  sold,  at  the 
instance  of  a  purchaser,  where  there 
was  nothing  in  any  of  the  decrees  to 
show  that  the  failure  to  provide  for 
the  payment  of  taxes  for  that  year 
was  a  clerical  error  or  mistake,  and 
the  taxes  were  not  due  at  the  time 
of  the  sale,  and  the  purchasers  by  ex- 
amining the  master's  report  and  de- 
crees could  readilj^  have  ascertained 
that  no  provision  had  been  made  for 
the  paj'ment  of  such  taxes.  Fidelity 
Ins.  T.  cC  .S'.  D.  Co.  v.  Roanoke  Iron 
Co.  84  Fed.  Rep.  752. 

Interest. 

Interest  should  not  be  allowed 
upon  a  claim  given  priority  over  a 
mortgage  in  funds  in  a  receiver's 
hands,  where  it  is  not  shown  that 
there  is  a  fund  specially  applicable 
to  its  payment  that  will  not  be  ex- 


hausted by  the  allowance  of  interest^ 
but  interest  should  be  allowed  from 
the  time  of  the  decree  in  favor  of  the 
claimant.  ISlew  England  R.  Co.  v. 
Carnegie  Steel  Co.  75  Fed.  Rep.  54, 
21  C.  C.  A.  219,  33  U.  S.  App.  491. 

A  receiver  is  not  liable  for  inter- 
est on  money  withheld  by  him  until 
he  could  be  advised  as  to  his  duty  in 
the  premises.  Guignon  v.  First  Nat. 
Bank  (Mont.)  55  Pac.  1051. 

Interest  will  not  be  allowed  in 
South  Carolina  on  open  accounts 
against  the  receiver  of  a  railroad,  in 
the  absence  of  a  contract  or  course  of 
dealing.  South  Carolina  v.  Port 
Royal  &  A.  R.  Co.  89  Fed.  Rep.  565. 

As  to  the  payment  of  interest  on 
encumbrances,  see  Leicis  v.  Zouche, 
2  Sim. 388, 393. 

The  court  will  not  take  the  net 
earnings  in  the  hands  of  its  receiver, 
when  large  expenses  have  accrued 
in  the  management,  and  apply  the 
same  to  the  payment  of  interest.. 
Cleveland,  C.  &  S.  R.  Co.  v.  Knicker- 
bocker Trust  Co.  64  Fed.  Rep.  623. 

Rule  where  creditors  hold  collaterals. 

The  courts  in  the  exercise  of  the 
power  conferred  by  Conn.  Gen.  Stat. 
§  1942,  to  make  such  orders  as  to  the 
payment  of  debts  and  distribution 
of  the  effects  of  an  insolvent  corpora- 
tion by  the  receiver  as  may  be  just 
and  conformable  to  law,  will  adopt 
the  principle  of  the  provision  of 
Conn.  Gen.  Stat.  §  590,  requiring  a 
secured  creditor  who  presents  his 
claim  against  an  insolvent  estate  to- 
elect  between  the  surrender  of  his 
security  and  a  dividend  only  upon 
the  excess  of  such  claim  above  the 
value  of  his  security.  Re  Waddell- 
Entz  Co.  67  Conn.  324. 

That  claims  of  creditors  are  se- 
cured by  mortgage  on  property  other 
than  that  of  the  insolvent  does  not 
debar  the  holders  from  sharing  in 
the  distribution  of  funds  by  the  re- 
ceiver of  the  insolvent.  Taylor  v. 
Moore,  04  Ark.  23. 

The  holder  of  the  bonds  of  an  in- 
solvent corporation  as  collateral  se- 
curity for  an  indebtedness  is  not  en- 
titled to  a  dividend  out  of  tlie  assets 
of  the  corporation  derived  from  the 
proj)erty  covered  by  the  mortgage 
securing  the  bonds,  on  tlie  basis  of 

127 


§  341 


RECEIVERSHIPS— SUPPLEMENT. 


the  aggregate  of  the  property  debt 
and  the  amount  remaining  unpaid 
on  the  bonds  after  the  mortgage  se- 
curity has  been  exhausted.  Patt- 
herg  v.  Leuis  Patthcrg  &  Bros.  55  N. 
J.  Eq.  G04.  Distinguishing  Diin- 
comb  V.  Xew  York,  H.  c6  A^.  It.  Co.  84 
N.  Y.  190. 

Expenses. 

The  following  expenses  are  prop- 
erly allowed  a  receiver:  — 

Attorney's  fees  for  defense  of  the 
estate.  Piatt  v.  Archer,  13  Blatchf. 
351 ;  Kadish  v.  Chicago  Co-Opcra- 
tive  Breicing  Asso.  35  111.  App.  411. 

All  reasonable  expenses  in  a  suit 
ordered  by  the  court.  Fitzgerald  v. 
Fitzgerald,  5  Ir.  Eq.  Rep.  525;  Jiob- 
inson  v.  Bank  of  Darien,  18  Ga.  G5. 

The  ordinary  outlays  made  in  good 
faith  by  a  receiver  of  a  railroad,  in 
the  ordinary  course  of  business,  for 
the  purpose  of  promoting  the  busi- 
ness of  the  road  and  to  make  it 
profitable,  are  within  the  discretion 
allowed  him.  Cowdrey  v.  Galves- 
ton, H.  d-  H.  R.  Co.  1  Woods,  331. 

Expenses  and  counsel  fees  in  re- 
sisting a  motion  for  removal  of  a  re- 
ceiver, when  he  has  acted  in  good 
faith  and  integrity,  may  be  allowed. 
Ibid. 

If  the  outlay  is  large  the  receiver 
should  apply  to  the  court  for  di- 
rection.    Ibid. 

Expenses  of  a  receiver  in  complet- 
ing a  contract  which  he  was  not 
bound  to  complete  are  payable  from 
the  sale  of  collateral,  where  the 
work  was  done  by  the  consent  of  all 
parties.  Re  A.  E.  Chasmar  tt-  Co.  22 
Misc.  080. 

A  receiver  appointed  without  re- 
muneration is  entitled  to  premiums 
paid  to  his  surety,  and  for  manual 
labor  beneficial  to  the  estate,  though 
not  part  of  his  duty  as  receiver. 
Harris  v.  Sleep  [1897]  2  Ch.  80.  GG 
L.  J.  Ch.  N.  S.  59G,  7G  L.  T.  N.  S. 
670,  Reversing  GG  L.  J.  Ch.  N.  S.  511, 
76  L.  T.  N.  S.  458. 

Xet  earnings  are  applied  primari- 
ly to  the  payment  of  wages,  supplies, 
and  materials  furnished.  Calhoun  v. 
St.  Louis  &  S.  E.  R.  Co.  9  Biss.  330. 

Holders  of  bonds  secured  by  mort- 
gage on  a  railroad,  who  are  parties 
to  a  proceeding  to  foreclose  liens  on 
138 


the  property,  and  become  purchasers 
at  a  sale  under  a  decree  requiring 
them  to  pay  expenses  of  a  receiver- 
ship, cannot  claim  to  be  subrogated 
to  the  rights  of  the  holders  of  claims 
so  paid,  so  as  to  be  entitled  to  en- 
force them  against  property  of  the 
railroad  not  covered  by  their  mort- 
gage, to  the  exclusion  of  holders  of 
other  liens  on  the  road,  wliere  the 
decree  plainly  intended  that  the 
claims  should  be  extinguished  when 
paid.  Morgan's  L.  cG  T.  R.  d  S.  S. 
Co.  V.  Moran,  91  Fed.  Rep.  22,  33  C. 
C.  A. 313. 

Expenses  of  a  receiver  of  a  railroad 
in  traveling  to  and  from  his  resi- 
dence to  the  railroad  property  and 
elsewhere  about  the  country,  in  the 
interest  of  the  property  in  his  cus- 
tody, may  be  reimbursed  to  him  out 
of  the  proceeds  of  the  sale.  North- 
ern Alahama  R.  Co.  v.  Hopkins,  59 
U.  S.  App.  74,  87  Fed.  Rep.  505,  31 
C.  C.  A.  94. 

Current  expenses  are  chargeable 
to  the  corpus  where  the  income  has 
been  diverted.  Virginia  d  A.  Coal 
Co.  V.  Central  R.  d  Bkg.  Co.  30  U. 
S.  App.  2G3;  Clark  v.  Central  R.  & 
Bkg.  Co.  GG  Fed.  Rep.  803,  14  C.  C. 
A.\\2;  Central  Trust  Co.  v.  Thur- 
man,  94  Ga.  735. 

And  this  irrespective  of  who  may 
be  the  ultimate  owner.  Illinois 
Trust  d  Sav.  Bank  v.  Pacific  R.  Co. 
115  Cal.  285. 

Where  receivership  benefits  all, 
the  expenses  should  be  borne  by  all. 
Johnson  v.  Garrett,  23  Minn.  5G5. 

Receivership  funds  and  property 
are  liable  for  supplies  and  equip- 
ments when  not  unreasonable,  as 
against  a  purchaser.  South  Carolina 
V.  Port  Royal  d  A.  R.  Co.  89  Fed. 
Rep.  5G5. 

And  for  terminal  facilities  af- 
forded the  receiver.     Ibid. 

And  for  operating  expenses  for  a 
reasonable  time  prior  to  the  appoint- 
ment of  the  receiver.  Central  Trust 
Co.  V.  Utah  C.  R.  Co.  IG  Utah,  12, 
Citing  Farmers'  Loan  d  T.  Co.  v. 
Kansas  City,  W.  d  N.  W.  R.  Co.  53 
Fed.  Rep.  182 ;  Burnham  v.  Boioen, 
111  U.  S.  77G,  28  L.  ed.  590;  Wood 
V.  'S'ew  York  d  N.  E.  R.  Co.  70  Fed. 
Rep.  741 ;  Thomas  v.  Peoria  d  R.  I. 
R.  Co.  3G  Fed.  Rep.  808. 


CLAIMS  AGAINST  RECEIVERSHIP  FUNDS. 


§  341 


A  receiver  of  a  corporation  is  en- 
titled to  a  lien  prior  to  that  of  credit- 
ors under  levies  prior  to  his  appoint- 
ment, for  interest  and  taxes  paid  by 
him  on  the  loan  levied  upon  to  pro- 
tect it  from  sale  under  a  mortgage 
prior  to  the  levies.  Durnmer  v. 
Sniedley,  110  Mich.  466,  38  L.  R.  A, 
490. 

Claims  for  cars  of  other  railroads, 
destroyed  by  a  railroad  company  in 
the  operation  of  its  road  within  the 
time  specified^  are  within  an  order 
directing  a  receiver  to  pay  all  such 
loss  and  damage  claims  arising 
from  the  operation  of  the  property 
as  in  his  judgment  are  proper  to  be 
paid  as  expenses  of  operation. 
Crrand  Trunk  R.  Co.  v.  Central  Ver- 
mont R.  Co.  88  Fed.  Rep.  636. 

Mortgagees  cannot  object  to  the 
payment  by  the  receivers  of  a  rail- 
road of  claims  for  supplies  furnished 
to  the  road  before  they  took  posses- 
sion, if  excess  of  net  earnings  re- 
ceived by  them  from  the  time  they 
took  possession  to  the  time  of  the 
breach  of  the  conditions,  over  operat- 
ing expenses  and  fixed  charges,  was 
more  than  enough  to  pay  these 
claims.  Grand  Trunk  R.  Co.  v.  Cen- 
tral Vermont  R.  Co.  88  Fed.  Rep. 
620. 

Claims  against  an  insolvent  rail- 
road company  for  its  right  of  way 
taken  without  paying  therefor  have 
priority  over  certificates  of  a  re- 
ceiver of  such  company  for  expenses 
of  its  operation  under  Tenn.  Const. 
art.  1,  §  21,' providing  that  no  prop- 
erty shall  be  taken  or  applied  to  pub- 
lic use  without  the  consent  of  the 
owner  or  without  just  compensation 
being  made  therefor.  Crosby  v. 
Morristoun  &  C.  G.  R.  Co.  (Tenn. 
Ch.  App.)  42  S.  W.  507.  [AflF'd  by 
Sup.  Ct.] 

Where  the  receiver  is  authorized 
to  incur  the  expenses  of  operation, 
the  payment  of  detectives  to  prevent 
loss  is  proper.  Grand  Trunk  R.  Co. 
V.  Central  Vermont  R.  Co.  88  Fed. 
Rep.  636. 

And  so  are  expenses  of  a  trip  to 
Europe  at  the  instance  ot  bondhold- 
ers to  efl'ect  a  reorganization,  \orth- 
em  Alabama  R.  Co.  v.  Hopkins,  59 
U.  S.  App.  74,  87  Fed.  Rep.  505,  31 
C.  C.  A.  94. 


And  clerical  services  in  making 
out  books  for  the  receiver,  where  it 
is  necessary  to  an  adjustment  of  the 
accounts.  Alattheics  v.  Adams,  84 
Md.  143. 

And  fees  of  a  referee  for  taking 
testimony  and  examining  the  receiv- 
er's accounts.  Re  Merry,  11  App. 
Div.  597. 

N.  Y.  Code  Civ.  Proc.  §§  3236, 
3251,  subd.  4,  provides  for  the  al- 
lowance on  such  a  reference  of  a 
sum  for  reference  fees  and  printing 
disbursements,  in  the  discretion  of 
the  court.  Anders07i  v.  Brackeleer 
25  Misc.  343,  Confirming  Referee's 
Report  in  28  N.  Y.  Civ.  Proc.  Rep. 
306. 

Referees'  fees,  counsel  fees  and  ex- 
penses, including  attorneys'  fees  of 
the  receiver  of  an  insolvent  corpora- 
tion, are  properly  allowed  out  of 
the  proceeds  of  a  sale  of  the  property 
of  the  corporation.  Re  P.  X.  Mullet 
&  Co.  47  N.  Y.  Supp.  277. 

While  there  is  no  liability  it  may 
be  policy  to  pay  an  employee  a  salary 
during  his  recovery  from  a  personal 
injury.  Missouri  P.  R.  Co.  v.  Texas 
d  P.  R.  Co.  33  Fed.  Rep.  701. 

The  following  expenses  of  the  re- 
ceiver have  been  held  not  allowable: 

Attorneys'  fees  for  hunting  up  and 
taking  possession  of  receivership 
property.  Saulsbury  v.  Lady  Ens- 
ley  Coal,  I.  d  R.  Co.  110  Ala.  585. 

Attorneys'  fees  in  defending  an  ap- 
peal from  an  order  appointing  a  re- 
ceiver; for  preparing  receiver's 
bond ;  costs  growing  out  of  his  resig- 
nation.    Ibid. 

A  receiver  proceeding  in  the  wrong 
form  of  action  cannot  recover  costs 
in  case  of  a  lunatic's  estate.  Re 
Montgomery,  1  ^lolloy,  419. 

Expenses  for  prosecution  of  suit 
in  a  foreign  country  not  allowed  ex- 
cept on  the  sanction  of  court.  Mal- 
colm V.  O'Callaghan,  3  Myl.  &  C.  52. 

The  receiver,  being  an  oiriccr  of 
court, is  not  entitled  to  costs  (though 
served  with  a  petition)  for  his  ap- 
pearance. Herman  v.  Dunbar,  23 
lieav.  312. 

A  person  illegally  procuring  him- 
self to  be  appointed  is  chargeable 
with  costs.  Robinson  v.  M'ood,  39 
N.  Y.  S.  R.  466. 

The  court  will  not  decree  the  pay- 

129 


§  341 


ment  of  receivers'  expenses  against 
the  party  securing  the  appointment, 
though  he  fail  in  his  suit,  where  the 
appointment  was  proper  and  the  se- 
cured creditors  consented.  It  may 
be  done  if  the  appointment  was 
wrongful.  French  v.  Gifford,  31 
Iowa,  428 ;  Jaffray  v.  Raab,  72  Iowa, 
335. 

The  salary  paid  the  president  of  a 
corporation  while  its  property  is  in 
the  hands  of  a  receiver  is  no  part  of 
the  expenses  of  the  receivership. 
'New  liirmingham  Iron  tC  Land  Co. 
V.  Blcvins  (Tex.  Civ.  App.)  40  S.  W. 
829. 

A  claim  for  a  retainer  of  counsel 
in  a  matter  not  connected  with  the 
operation  of  the  road,  and  for  assess- 
ment of  a  railroad  association,  are 
not  within  an  order  directing  re- 
ceivers of  a  railroad  to  pay  expenses 
of  the  operation.  Grand  Trunk  R. 
Co.  v.  Central  Vermont  R.  Co.  88 
Fed.  Rep.  G3G. 

An  employee  of  a  receiver  has  no 
right  to  file  a  petition  for  an  order 
to  compel  the  receiver  to  pay  him. 
Gatzmcr  v.  Philadelphia  &  A.  C.  R. 
Co.  39  N.  J.  Eq.  3G3. 

A  receiver  of  a  state  court  is  not 
chargeable  with  the  expenses  of  a  re- 
ceiver of  the  Federal  court  while  the 
property  was  in  his  hands.  Central 
Trust  Co.  v.  Thurtnan,  94  Ga.  735. 

An  attorney  employed  by  a  receiv- 
er at  a  stipulated  salary,  who  seeks 
in  another  court  to  enforce  a  claim 
against  the  receivership  property, 
must  show  that  his  claim  for  services 
was  authorized  bj'  the  court  or  ap- 
proved by  it.  International  d  G.  N. 
R.  Co.  v.'Herndon,  11  Tex.  Civ.  App. 
465. 

A  receiver  cannot  pay  out  of  as- 
sets in  his  hands  the  taxes  upon  a 
tug  which  was  not  the  property  of 
his  principal,  the  tax  lien  upon 
which  has  been  enforced  in  the  ad- 
miralty. McRae  v.  Bowers  Dredg- 
ing Co.  90  Fed.  Rep.  360. 

As  to  what  were  costs  and  ex- 
penses of  receivership,  see  Seligman 
V.  Saussy,  60  Ga.  20.  25. 

Parties  are  not  relieved  from  lia- 
bility for  receivership  expenses  by  a 
purchase  of  the  receivership  prop- 
erty under  a  foreclosure,  where  the 
receivership  funds  have  been  di- 
130 


RECEIVERSHIPS— SUPPLEMENT. 


verted.  Knickerbocker  v.  McKind- 
leij  Coal  &  Min.  Co.  172  111.  535, 
Allirming  67  111.  App.  291.  In  thia 
case  there  was  a  stipulated  decree. 

So  much  of  the  funds  in  the  hands 
of  a  permanent  receiver  appointed 
in  a  proceeding  under  the  Georgia 
traders'  act  against  an  insolvent 
debtor,  from  the  sale  of  property 
covered  by  a  mortgage  executed  and 
recorded  prior  to  the  filing  of  the  pe- 
tition, as  is  necessary  to  pay  olf  the 
amount  due  on  the  mortgage,  is  not 
subject  to  be  diminished  by  costs  and 
expenses  of  the  receivership ;  but  so 
much  of  such  costs  and  expenses 
which  cannot  be  met  by  the  general 
fund  arising  from  the  sale  of  the 
debtor's  property  in  excess  of  the 
amount  of  the  mortgage,  or  not 
covered  by  the  mortgage  lien,  shall 
be  taxed  against  the  petitioners. 
Bradford  v.  Cooledge,  103  Ga.  753. 

The  parties  to  the  suit  may  be  re- 
quired to  pay  the  receivership 
costs  and  expenses.  St.  Louis  v.  St. 
Louis  Gaslight  Co.  11  Mo.  App.  237. 

As,  where  the  plaintiff,  on  whose 
motion  the  receiver  was  appointed, 
had  no  interest  in  the  receivership 
property.  Cutter  v.  Pollock,  7  N. 
D.  631. 

Or  where  the  appointment  is  pro- 
cured under  the  assertion  of  an  un- 
just and  Avrongful  claim.  Eighley 
v.  Deane,  168  111.  266. 

Or  where  a  large  sum  was  pro- 
cured, by  reason  of  the  appointment, 
for  the  plaintiff's  benefit.  Farm- 
ers' Nat.  Bank  v.  Backus  (Minn.) 
77  N.  W.  142. 

Or  where  the  bill  is  filed  to  fore- 
close a  fraudulent  mortgage.  High- 
ley  V.  Deane,  64  111.  App.  389. 

A  stipulation  that  half  the  receiv- 
ership expenses  shall  be  paid  by  one 
party  and  half  by  the  other  is  a 
recognition  of  the  regularit_y  of  the 
receiver's  appointment  and  of  his 
right  to  compensation.  Kimmerlev. 
Dowagiac  Mfg.  Co.  105  Mich.  640. 

A  creditor  prosecuting  a  case 
through  the  receiver  against  third 
parties  is  liable  for  costs  if  he  fails, 
if  the  suit  is  for  his  sole  benefit. 
^Vard  V.  Roy,  69  N.  Y.  96. 

When  a  receiver  is  appointed 
without  probable  cause,  the  party 
procuring   the  appointment    should 


CLAIMS  AGAINST  RECEIVERSHIP  FUNDS. 


i;  342 


pay   the  expenses.     Myres  v.  Frank- 
enthal,  55  111.  App.  390. 

The  unsuccessful  result  of  the 
suit  does  not  justify  taxing  the  re- 
ceivership expenses  to  plaintiff. 
Elk  Fork  Oil  &  Gas  Co.  v.  Jennings, 


90  Fed.  Rep.    767;  Walton  v.    Will- 
iams, 5  Okla.  642. 

When  receiver's  agreement  con- 
cerning expenses  is  void.  Shade- 
wald  V.  White  (Minn.)  77  X.  W.  42. 


Page  574,  sec.  342. — Preferred  claims. 


Priority  may  be  determined  in 
the  suit  in  which  the  receiver  is  ap- 
pointed. Myrick  v.  Selden,  36  Barb. 
15. 

The  right  of  a  corporation,  al- 
though insolvent,  to  prefer  creditors, 
cannot  be  exercised  by  its  receiver, 
since  such  power  terminates  when 
the  corporate  property  is  placed  in 
custodia  legis.  Re  Osceola  Milling 
Co.  76  Mo.  App.  23. 

That  the  personnel  of  a  receiver- 
ship has  been  changed  will  not  affect 
the  priority  of  a  claim  against  the 
receivership.  State  v.  Port  Royal  & 
A.  R.  Co.  84  Fed.  Rep.  67. 

A  general  creditor  has  the  right  to 
intervene  in  case  of  a  receivership 
and  contest  the  validity,  as  well  as 
the  priority,  of  other  claims  or  as- 
serted liens.  Franklin  Nat.  Bank  v. 
Whitehead,  149  Ind.  560,  39  L.  R.  A. 
725. 

An  order  of  court  directing  a  re- 
ceiver of  a  corporation  to  pay  a 
specified  dividend  on  all  claims 
against  the  corporation  does  not 
make  the  dividend  to  which  a  credit- 
or is  entitled  thereunder  a  preferred 
lien  upon  the  entire  assets  of  the  cor- 
poration; and  the  remedy  of  a  credit- 
or whose  dividend  has  not  been  paid 
to  him  is  an  application  to  the  court. 
Rockwell  V.  Portland  Sav.  Bank,  31 
Or.  431. 

The  date  when  claims  must  have 
accrued  in  order  to  be  entitled  to 
priority  of  payment  under  Mass. 
Stat.  1890,  chap.  421,  §  14,  provid- 
ing that  when  an  assessment  insur- 
ance company  shall  discontinue  busi- 
ness a  receiver  may  be  appointed  to 
administer  any  unexhausted  portion 
of  the  emergency  fund,  which  shall 
be  used  first  in  the  payment  of  ac- 
crued claims  upon  certificates  or 
policies,  is  the  date  of  tlio  filing  of 
the  bill.  Atty.  Gen.  v.  MaHsachu- 
setta  Ben.  L.  Aaao.  171  Mass.  193. 


Notes  given  in  the  prosecution  of 
the  business  of  a  corporation  during 
the  pendency  of  a  bill  for  the  ap- 
pointment of  a  receiver,  and  before 
the  appointment,  should  be  allowed 
whenever  they  mature,  with  an  ad- 
dition or  rebate  of  interest,  as  in  in- 
solvency proceedings,  where  the  cir- 
cumstances are  such  as  to  render  it 
equitable  that  the  rights  of  the  re- 
spective parties  should  be  adjusted 
as  of  the  date  of  the  appointment, 
and  not  of  the  filing  of  the  bill. 
Jones  V.  Arena  Publishing  Co.  171 
Mass.  22. 

There  is  no  fixed  arbitrary  rule 
barring  preferential  claims  that  have 
been  contracted  more  than  six 
months  before  the  appointment  of  a 
receiver.  New  York  Guaranty  & 
Indemnity  Co.  v.  Broderick  &  B. 
Rope  Co.  48  U.  S.  App.  668,  snh  nom. 
Ntw  York  Guaranty  d  Indemnity 
Co.  V.  Tacoma  R.  &  Motor  Co.  83 
Fed.  Rep.  365,  27  C.  C.  A.  550. 

Priority  as  between  receivers  of  a 
bank  appointed  by  different  judges 
in  proceedings  instituted  by  a  credit- 
or of  the  bank  and  the  state  treas- 
urer respectively  is  to  be  determined 
by  reference  to  the  date  of  the  ap- 
pointment, and  not  by  the  dates  of 
the  commencement  of  the  respective 
proceedings.  Worth  v.  Piedmont 
Bank,  121  N.  C.  343. 

In  supplementiiry  proceedings  in 
North  Carolina,  priority  as  between 
creditors  is  determined  from  the  date 
of  the  application  for  appointment. 
Parks  V.  Sprinkle,  64  N.  C.  637. 

Delay  of  a  creditor  entitled  to 
priority  in  tlie  funds  in  the  hands  of 
receivers  of  a  railroad  over  the  mort- 
gages, until  after  payment  of  many 
other  claims  of  the  same  class,  will 
not  bar  recovery  if  there  are  assets 
from  whicli  the  claim  can  still  be 
paid.     New  England  R.  Co.   v.    Car- 

131 


§  342 


RECEIVERSHIPS— SUPPLEMENT. 


negie  Steel  Co.  33  U.  S.  App.  491,  21 
C.  C.  A.  219,  75  Fed.  Rep.  54. 

A  creditor  of  an  insolvent  cor- 
poration in  a  proper  case  may  be  per- 
mitted to  file  his  claim  after  the  ex- 
piration of  the  period  limited  for 
that  purpose  by  a  rule  of  the  court, 
and  may  be  allowed  a  preferential 
dividend  out  of  the  estates  coming 
into  the  hands  of  the  receiver  to  such 
an  extent  as  will  put  him  on  an 
equality  with  other  creditors  who 
have  received  partial  dividends. 
Pattherg  v.  Letois  Pattherg  &  Bros. 
55  N.  J.  Eq.  G04. 

A  creditor  securing  the  appoint- 
ment in  supplementary  proceedings, 
and  who  through  the  receiver  ob- 
tains a  decree  setting  aside  a  trans- 
fer of  the  debtors  under  1  N.  Y.  Rev. 
Stat.  p.  76G,  §  20,  is  entitled  to 
prioritv.  Sticfcl  v.  Berlin^  28  App. 
Div.  103. 

Billholders  of  a  bank  are  not  en- 
titled to  priority  over  other  credit- 
ors. Cochituate  Bank  v.  Colt,  1 
Gray,  382. 

Creditors  of  a  receiver  of  a  part- 
nership on  account  of  goods  pur- 
chased from  them  under  order  of  the 
court  and  sanction  of  the  creditors 
of  the  partnership,  to  enable  him  to 
dispo.~e  of  the  partnersip  assets,  are 
entitled  to  a  preference  in  the  fund 
in  the  hands  of  the  receiver  over 
other  creditors  of  the  receiver  on  ac- 
count of  similar  sales,  who  are  also 
creditors  of  the  firm  and  who  have 
received  and  retained  dividends  upon 
their  claims  against  the  firm  out  of 
money  which  should  have  been  ap- 
plied to  the  payment  of  the  receiver's 
creditors.  Diamond  Match  Co.  v. 
Taylor,  83  Md.  394. 

A  receiver  of  a  corporation  is  en- 
titled to  a  lien  prior  to  that  of 
creditors  under  levies  prior  to  his  ap- 
pointment, for  interest  and  taxes 
paid  by  him  on  the  land  leaned  upon 
to  protect  it  from  sale  under  a  mort- 
gage prior  to  the  levies.  Dummer 
V.  Smedlexj,  110  Mich.  4G6,  38  L.  R. 
A.  490. 

A  nonresident  cannot  by  filing  an 
attachment  in  Pennsylvania  obtain 
preference  over  a  receiver  previous- 
ly appointed  of  the  property  of  a 
citizen  of  a  third  state.  Paladini 
133 


v.  Maryland  Silk  Co.  IS  Pa.  Co.  Ct. 
175. 

The  proceeds  of  property  realized 
by  a  receiver  in  wliose  hands  it  was 
placed  subject  to  attachment  liens 
are  properly  paid  to  the  attachment 
creditors  without  regard  to  other 
creditors,  where  they  are  less  than 
the  amount  of  the  attachment  liens. 
Re  Atlas  Iron  Constr.  Co.  19  App. 
Div.  415. 

The  lien  of  an  execution  or  attach- 
ment secured  prior  to  the  appoint- 
ment will  be  entitled  to  a  priority. 
Pease  v.  Smith,  G3  111.  App.  411. 

An  attachment  creditor  of  a  cor- 
poration is  entitled  to  payment  of 
the  amount  of  his  lien  out  of  funds 
in  the  hands  of  a  receiver  of  the  cor- 
poration to  whom  the  attached 
property  was  delivered  by  the  sheriff 
under  an  order  of  court  reserving 
the  attachment  lien,  in  preference  to 
a  claim  for  personal  taxes  assessed 
against  the  corporation  before  the 
attachment,  but  not  made  a  lien  on 
the  property  in  question  by  the  issu- 
ance of  a  warrant  for  their  collection 
at  that  time.  Wise  v.  L.  &  C.  Wise 
Co.  12  App.  Div.  319. 

A  seizure  designed  to  give  priority 
in  favor  of  one  over  other  creditors, 
based  on  imminence  of  insolvency, 
does  not  secure  such  priority.  Grand 
Trunk  R.  Co.  v.  Central  V.  R.  Co.  88 
Fed.  Rep.  G22. 

Receivers  of  a  railroad  company 
which  has  leased  another  road,  sub- 
ject to  a  provision  that  all  the  gross 
earnings  of  the  latter  shall  be  ap- 
plied first  to  the  expense  of  mainte- 
nance and  improvement  and  then  to 
the  payment  of  the  interest  on  the 
bonds  issued  by  the  lessor  road,  will 
be  directed  to  make  payment  of  the 
net  earnings  to  the  bondholders  in 
preference  to  claims  for  damages 
arising  from  the  operation  of  the 
leased  road,  where  the  lease  provides 
that  the  lessee  shall  assume  all  obli- 
gations of  the  lessor  thereafter  in- 
curred as  common  carrier,  ware- 
houseman, or  otherwise,  and  save 
the  lessor  harmless  from  all  loss  by 
reason  of  any  claim  for  any  neglect, 
accident,  or  default  happening  upon 
or  in  connection  with  the  road,  and 
from  any  claims  arising  from  the 
maintenance   and   operation   of    the 


CLAIMS  AGAINST  RECEIVERSHIP  FUNDS. 


§  342 


road.  Grand  Trunk  R.  Co.  v.  Cen- 
tral Vermont  R.  Co.  81  Fed.  Rep. 
60. 

Creditors  whose  claims  are  pro- 
vided by  a  lease  of  a  railroad  to  be 
paid  before  the  payment  of  net  earn- 
ings to  bondholders  are  not  entitled 
to  priority  of  lien  upon  the  assets 
in  the  hands  of  a  receiver  of  a  lessee 
road  which  has  assumed  payment  of 
such  claims,  where  they  have  let  pay- 
ment to  the  bondholders  be  made 
first,  and  themselves  remain  cred- 
itors of  the  lessee  company.  Grand 
Trunk  R.  Co.  v.  Central  Vermont  R. 
Co.  78  Fed.  Rep.  690. 

A  consignor  to  a  commission  com- 
pany of  cattle  whose  proceeds  were 
to  be  applied  to  payment  of  a  note 
given  by  him  to  the  company  is  not 
entitled  to  a  preference  in  the  assets 
in  the  hands  of  a  receiver  of  the  com- 
pany because  the  company  applied 
the  proceeds  of  such  cattle  to  the  dis- 
charge of  its  other  indebtedness, 
further  than  such  proceeds  came  into 
the  hands  of  the  receiver  or  went 
into  property  which  has  come  into 
his  hands.  Metropolitan  Nat.  Bank 
V.  Campbell  Commission  Co.  77  Fed. 
Rep.  705. 

Rent  for  a  limited  period,  in  South 
Carolina,  has  priority.  Malcomson 
V.  Wappoo  Mills,  85  Fed.  Rep.  907. 
A  creditor  of  a  railroad  corpora- 
tion whose  claim  originated  in  the 
negligent  act  of  its  servant  is  not  en- 
titled to  be  paid  in  preference  to  the 
holders  of  existing  liens  upon  the 
corporate  property.  Farmers'  Loan 
d  T.  Co.  v.  Irvine,  48  U.  S.  App.  324, 
sub  nom.  Farmers'  Loan  &  T.  Co.  v. 
Northern  P.  R.  Co.  79  Fed.  Rep.  227, 
24  C.  C.  A.  511. 

A  claim  for  services  rendered  by 
attorneys  under  an  order  of  court,  in 
attempting  to  enforce  the  collection 
of  a  judgment  in  favor  of  the  master 
commissioner,  which  when  collected 
was  intended  for  the  benefit  of  all 
the  creditors  of  an  insolvent  corpo- 
ration in  the  hands  of  a  receiver,  is 
entitled  to  priority  over  the  demands 
of  general  creditors  in  the  funds  of 
the  corporation  in  the  hands  of  the 
special  master  for  distribution. 
Armstrong  v.  Wagner,  20  Ky,  L. 
Eep.  142. 


Trust  funds. 


The  fund  in  the  hands  of  the  re- 
ceiver of  a  national  bank  will  not  be 
held  to  have  been  augmented  by  a 
trustee's  deposit,  so  as  to  entitle  the 
trustee  to  a  return  of  the  fund  in 
preference  to  other  creditors  of  the 
bank,  if  the  deposit  was  a  check  on  the 
bank  itself  by  one  of  its  oificers,  and 
the  credit  was  merely  transferred 
from  one  account  to  the  other,  with- 
out any  actual  deposit  of  money. 
Beard  v.  Independent  Dist.  60  U.  S. 
App.  372,  88  Fed.  Rep.  375,  31  C. 
C.  A.  502. 

A  cestui  que  trust  who  joins  in  a 
release  to  the  trustee  in  order  to  pro- 
cure a  loan  of  the  trust  fund  to  a 
corporation  in  furtherance  of  his 
own  individual  interest  cannot  claim 
a  preference  over  other  creditors  out 
of  the  assets  of  the  corporation  in 
the  hands  of  a  receiver,  as  the  fund 
lost  its  quality  as  a  trust  fund 
through  his  acts.  Todd  v.  Meding, 
56  N.  J.  Eq.  83. 

It  is  not  essential  to  the  creation 
of  a  preference  in  the  funds  in  the 
hands  of  a  receiver  of  a  bank  for 
trust  funds  held  by  the  bank  that  the 
trust  fund  shall  be  actually  traced 
into  specific  property  coming  into 
the  hands  of  the  receiver,  but  it  is 
sufficient  if  it  can  be  traced  into  the 
general  assets  of  the  bank.  Leonard 
V.  Latimer,  67  Mo.  App.  138. 

Receivers'  certificates. 

Receivers'  certificates  are  not  en- 
titled to  priority  as  against  other 
lien  holders  not  consenting.  Doe  v. 
Northicestern  Coal  d  Transp.  Co.  78 
Fed.  Rep.  62. 

Persons  taking  receivers'  certifi- 
cates issued  under  order  of  court  not 
making  them  a  prior  lien  to  all  other 
claims,  in  place  of  prior  certificates 
which  are  ordered  to  be  made  such 
prior  lien,  are  not  entitled  to  the 
preference  given  under  the  first  or- 
der. Lewis  V.  Linden  Steel  Co.  27 
Pittsb.  L.  J.  N.  S.  395. 

Of  mortgagees. 

Claims  not  in  existence  when  a 
mortgage  was  executed,  and  which 
are  nut  given  priority  by  contract 
or  by  law,  have  no  oriority  over  the 

188 


§  343 


RECEIVERSHIPS— SUPPLEMENT. 


mortgage.  Farmers'  &  M.  Nat.  Bank 
V.  Waco  Electric  R.  d  Light  Co. 
(Tex.  Civ.  App.)   36  S.  W.  131. 

The  law  in  reference  to  preferences 
over  the  mortgage  debts  in  property 
of  railroads  in  the  hands  of  receivers 
is  applicable  to  a  water  company  or- 
ganized for  irrigation  purposes,  as 
such  purposes  are  a  public  use  and 
it  is  essential  to  the  interests  of  the 
public  that  the  company  be  kept  a 
going  concern.  Atlantic  Trust  Co. 
v.  M'oodbridge  Canal  d  Irrig.  Co.  79 
Fed.  Rep.  39. 

A  receiver  of  an  irrigation  com- 
pany cannot  be  directed  to  convey 
water  rights  to  the  holder  of  scrip 
expressly  stipulating  that  it  is  ac- 
cepted only  as  a  payment  for  the 
purchase  of  a  permanent  water  right, 
and  not  as  a  claim  against  the  com- 
pany for  any  other  purpose  whatever, 
and  tlie  water  rights  sought  to  be 
recognized  as  against  the  mortgage 
lien  are  not  appurtenant  or  attached 
to  any  specific  land.  Atlantic  Trust 
Co.  v.  Woodbridge  Canal  &  Irrig.  Co. 
79  Fed.  Rep.  501. 

Holders  of  scrip  issued  by  a  water 
company  and  receivable  in  paJ^nent 
of  any  water  rights  are  not  entitled 
to  priority  over  a  mortgage  in  the 
proceeds  of  the  property  of  the  com- 
pany in  the  hands  of  a  receiver,  what- 
ever might  haA'e  been  the  rights  of 
the  person  who  furnished  the  ma- 
terial and  supplies  for  which  such 
scrip  was  issued.     Ihid. 

All  earnings  and  rents  collected  by 
a  receiver  appointed  in  an  action  in 
the  nature  of  a  creditors'  bill  are  sub- 
ject to  the  lien  of  a  valid  mortgage 
executed  before  the  rendition  of  the 
judgment  in  favor  of  plaintiff,  and 
must  be  paid  over  to  the  mortgagee 
after  deducting  the  expenses  of  the 
receivership,  where  such  mortgagee 
intervenes  in  the  action,  provided 
such  payment  is  necessary  to  satisfy 
a  deficiency  after  the  sale  of  the 
mortgaged  property.  McKenzie  v. 
Bismar^ck  VTater  Co.  G  N.  D.  3G1. 

A  mortgagee  has  an  equitable 
claim  on  the  rents  due  and  to  accrue 
superior  to  any  arising  subsequent 
to  the  mortgage,  by  reason  of  a  re- 
ceivership; and  the  tenants  will  be 
compelled  to  attorn.  Woodyatt  v. 
Connell,  38  111.  App.  475. 
134 


The  provision  of  the  acts  relating 
to  the  Chesapeake  &  Ohio  Canal 
Company  and  the  Baltimore  &  Ohio 
Railroad  Company,  by  which  the 
state  of  Maryland  subscribed  to  the 
stock,  that  the  company  shall  be 
bound  to  pay  out  of  the  profits  a 
dividend  of  G  per  cent  per  annum, 
and  that  the  state  shall  be  entitled  to 
have  and  receive  such  perpetual  divi- 
dend out  of  the  profits  of  the  work 
as  declared  from  time  to  time,  does 
not  make  any  pledge  or  specific  ap- 
propriation of  the  profits  which  will 
entitle  the  holders  of  such  preferred 
stock  to  priority  in  the  net  profits 
over  the  liens  of  subsequent  mort- 
gage bondholders,  or  the  rights  of 
lessors  of  properties  held  under 
leases,  or  of  holders  of  equipment 
contracts  giving  a  right  of  possession 
upon  default.  Mercantile  Trust  Co. 
v.  Baltimore  d  0.  R.  Co.  82  Fed.  Rep. 
3G0. 

Complainants  in  a  suit  to  fore- 
close a  mortgage  made  by  a  corpo- 
ration, of  all  whose  property  a  re- 
ceiver is  appointed  in  the  suit,  are 
upon  a  par  with  other  general  cred- 
itors who  may  become  parties  to  the 
proceeding,  as  to  any  unsatisfied  bal- 
ance that  may  remain  due  them,  aft- 
er appropriation  to  their  demand  of 
the  proceeds  of  the  property  upon 
which  the  mortgage  is  foreclosed,  in 
the  assets  not  subject  to  the  mort- 
gage or  the  judgment  liens.  Mer- 
cantile Trust  Co.  V.  Southern  States 
Land  d  T.  Co.  52  U.  S.  App.  675,  83 
Fed.  Rep.  711,  30  C.  C.  A.  349. 

A  preferential  claim  cannot  be  al- 
lowed against  the  property  of  a  les- 
sor railroad  company  for  the  value 
of  rails  sold  to  and  on  the  credit  of 
a  stockholder  for  the  benefit  of  the 
lessee,  over  mortgage  bondholders  of 
the  lessor.  Ruhlender  v.  Chesa- 
peake, 0.  d  S.  W.  R.  Co.  91  Fed.  Rep. 
5,  33  C.  C.  A.  299. 

Where  a  junior  mortgagee  obtains 
the  appointment  of  a  receiver,  ana 
is  authorized  to  take  possession  and 
operate  a  railroad  and  receive  its 
earnings,  a  senior  mortgagee  may 
apply  for  and  obtain  such  earnings. 
Seibert  v.  Minneapolis  d  St.  L.  R. 
Co.  52  Minn.  246. 

Arrears  of  salary  of  the  president 
of  a  railroad  company  will  not  be 


CLAIMS  AGANST  RECEIVERSHIP  FUNDS. 


342 


paid,  in  preference  to  the  lien  of  a 
mortgage,  from  income.  Xational 
Bank  v.  Carolina,  K.  &  W.  R.  Co. 
63  Fed.  Rep.  25. 

The  lien  of  a  valid  mortgage  on 
railroad  property  existing  at  the 
time  of  filing  a  bill,  under  Ga.  Civ. 
Code,  §§  2719  et  seq.,  for  the  ap- 
pointment of  a  receiver  of  the  rail- 
road property,  cannot  be  displaced 
so  as  to  give  a  preference  to  a  cred- 
itor who  relies  solely  on  a  preferen- 
tial equity.  Alexander  v.  Mercantile 
Trust  d-  D.  Co.  100  Ga.  537. 

A  mortgage  upon  city  lots  after- 
wards becoming  part  of  street-rail- 
way property  cannot  be  subordinated 
to  the  expenses  of  a  receiver  of  the 
property  of  the  company.  Third 
Street  &  8.  R.  Co.  v.  Lewis,  48  U.  S. 
App.  273.  79  Fed.  Rep.  196,  24  C.  C. 
A.  482. 

Preference  to  railroad  mortgagees 
is  not  gained  by  payment  of  a  judg- 
ment against  the  railroad  company 
for  damages,  when  it  is  paid  after 
its  affirmance  on  appeal  by  the 
surety  on  a  supersedeas  bond  who 
signed  it  when  the  mortgage  was  in 
existence  and  no  default  had  been 
made  upon  it  and  when  the  railroad 
company  was  apparently  solvent,  al- 
though the  bond  may  have  benefited 
the  mortgagees  by  preventing  a  levy 
on  the  railroad  which  might  have 
worked  detriment  to  them  directly 
and  indirectly  as  substantial  owners 
of  the  property.  Whiteley  v.  Cen- 
tral Trust  Co.  43  U.  S.  App.  643,  76 
Fed.  Rep.  74,  22  C.  C.  A.  67,  34  L. 
R.  A.  303. 

As  to  when  a  mortgagee  is  entitled 
to  priority  in  rents  over  an  assignee 
of  the  lease  from  the  mortgagor,  see 
Citizens'  Sav.  &  L.  Co.  v.  French,  4 
Ohio  N.  P.  61. 

Of  judgment  creditors. 

Judgments  obtained  against  an  in- 
solvent corporation  after  the  ap- 
pointment of  a  receiver  of  its  assets 
are  not  liens  upon  the  real  estate. 
Fidelity  Ins.  T.  &  H.  D.  Co.  v.  Ro- 
anoke Iron  Co.  SI  Fed.  Rep.  439. 

Judgment  creditors  are  entitled  to 
be  paid  out  of  surplus  income  real- 
ized by  a  receiver  apjjointed  in  a 
Btocklioldcr's  suit  prior  to  the  filing 
of  a  bill  of  foreclosure  in  which  he 


was  subsequently  appointed  in  pref- 
erence to  the  mortgage  debt.  Veatch 
v.  American  Loan  cC-  T.  Co.  49  U.  S. 
App.  191,  79  Fed.  Rep.  471,  25  C.  C. 
A.  39. 

Judgments  recovered  against  an 
insolvent  corporation  after  the  ap- 
pointment of  a  receiver,  whether  en- 
tered by  leave  of  court  or  not,  are  not 
such  liens  on  the  corporate  real  es- 
tate as  to  be  entitled  to  preference 
in  the  distribution  of  the  receiver- 
ship funds.  Cowan  v.  Pennsylvania 
Plate  Glass  Co.  184  Pa.   1. 

Judgment  creditors'  liens  lost  by 
laches  are  not  entitled  to  priority. 
Savings  &  T.  Co.  v.  Bear  Valley 
Irrig.  Co.  89  Fed.  Rep.  32. 

An  order  appointing  a  receiver  of 
moneys  receivable  by  a  corporation 
from  its  interest  in  a  ship  and  her 
freight  does  not  confer  on  a  judg- 
ment creditor  any  charge  on  the  cor- 
poration's property,  so  as  to'  make 
him  a  secured  creditor,  and  is  not 
equivalent  to  a  seizure  of  the  prop- 
erty in  execution.  Croshaiv  v.  Lynd- 
hurst  Ship  Co.  [1897]  2  Ch.  154,  66 
L.  J.  Ch.  N.  S.  576,  76  L.  T.  N.  S. 
553. 

Judgment  creditors  are  entitled  to 
priority  though  the  judgment  is  aft- 
er the  appointment  but  before  the 
decree  in  an  action  to  administer 
the  property  of  a  corporation. 
Moore  v.  Southern  States  Land  & 
Timber  Co.  83  Fed.  Rep.  399. 

A  judgment  entered  nunc  pro  tunc 
antedating  the  appointment  is  not 
entitled  to  priority  over  other  cred- 
itors. Coican  V.  Pennsylvania  Plate 
Glass  Co.  184  Pa.  1. 

Nor  is  one  entered  after  the  ap- 
pointment, though  suit  was  com- 
menced prior.  Lang  v.  Macon  Constr^ 
Co.  101  Ga.  343. 

A  covenant  in  a  lease  of  a  rail- 
road, that  the  gross  earnings  shall 
be  applied  first  to  .satisfy  obligations 
assumed  by  the  lessee  of  the  lessor 
"as  common  carrier,  warehouseman, 
or  otherwise,"  and  thereafter  to  pay- 
ment of  the  interest  on  mortgage 
bonds  of  tlie  lessor,  does  not  give  pri- 
ority in  earnings  of  the  roa(l  in  the 
hands  of  receivers  of  the  lessee,  to  a 
judgment  uj)on  a  note  made  by  the 
lessor  company.  WcUloi  Sat.  Hank 
V.  Parsons,  57  U.    S.    App.    13(i,  sub 

135 


§  343 


RECEIVERSHIPS— SUPPLEMENT. 


nom.  Wcldcn  Xat.  Bank  v.  timith, 
86  Fed.  Kcp.  398,  30  C.  C.  A.  133. 

The  holders  of  judgments  against 
a  railroad,  who  are  given  a  lien  pri- 
or to  the  mortgage,  are  entitled  to 
priority  over  of  the  earnings  of  the 
receiver  appointed  under  a  general 
creditors'  bill.  Thomas  v.  Cincin- 
nati, N.  0.  <£  T.  F.  R.  Co.  91  Fed. 
Rep.  202. 

A  plaintilf  in  a  general  creditors' 
bill  against  an  insolvent  corporation, 
who  bases  his  claim  on  a  judgment 
against  the  company  for  a  specified 
amount  for  breach  of  a  contract  by 
the  company  to  construct  a  depot 
and  perform  other  agreements  made 
as  a  consideration  for  the  con- 
veyance to  it  by  plaintiff  of  land  for 
a  right  of  way,  does  not  occupy  the 
position  of  a  right-of-way  claimant 
in  the  creditors'  bill  as  to  preference 
in  the  funds  in  the  hands  of  a  re- 
ceiver. Croshy  v.  Morristoicn  &  G. 
CI.  li.  Co.  (Tciin.  Ch.  App.)  42  S.  W. 
507. 

For  personal  injuries  and  death. 

A  claim  for  damages  for  personal 
injuries  resulting  from  a  negligent 
act  of  a  mortgagor  railroad  company, 
committed  before  the  appointment  of 
a  receiver  in  a  suit  to  foreclose  the 
moi-tgage,  is  not  a  preferential  claim 
entitled  to  be  paid  out  of  the  income 
or  corpus  of  the  mortgaged  property, 
to  the  exclusion  of  the  mortgage 
debt.  Veatch  v.  American  Loan  d 
T.  Co.  4'J  U.  S.  App.  191,  79  Fed. 
Rep.  471,  25  C.  C.  A.  39. 

Claims  for  injuries  by  the  negli- 
gence of  a  railroad  company  prior  to 
the  appointment  of  a  receiver,  but 
after  the  execution  of  and  recording 
of  mortgages  upon  the  road,  cannot 
be  given  precedence  over  the  mort- 
gage liens  in  the  funds  in  the  hands 
of  the  receiver.  Farmers'  Loan  & 
T.  Co.  v.  Northern  P.  R.  Co.  74  Fed. 
Rep.  431. 

Expenditure  by  a  receiver  of  in- 
come for  improvements  and  altera- 
tion of  a  railroad  will  not  entitle 
claims  for  personal  injuries  to  pref- 
erence on  the  ground  that  such  ex- 
penditure was  a  diversion,  where  the 
mortgage  clearly  authorizes  an  ex- 
penditure of  the  income  of  the  mort- 
gaged property  for  such  purposes  by 

136 


the  trustee.  Y catch  v.  American 
Loan  d  T.  Co.  49  U.  S.  App.  191,  79 
Ftd.  Rep.,  471,  25  C.  C.  A.  39. 

Claims  for  damages  caused  by 
negligence  in  the  operation  of  a 
mortgaged  railroad  cannot  be  paid 
as  preferential  claims  out  of  the  as- 
sets in  the  hands  of  the  receiver. 
Front  Street  Cable  R.  Co.  v.  Drake, 
84  Fed.  Rep.  257. 

The  holder  of  a  judgment  for  per- 
sonal injuries  against  a  railroad 
company  cannot  claim  preference  to 
a  mortgage  debt  out  of  the  assets  in 
the  hands  of  a  receiver  because  an- 
otlier  railroad  company  while  operat- 
ing the  road  of  the  mortgagor  and 
judgment  debtor  has  expended  in- 
come in  making  permanent  improve- 
ments instead  of  appropriating  it  as 
required  by  the  contract  to  the  pay- 
ment of  operating  expenses,  as  the 
breach  of  such  provision  can  be  com- 
plained of  only  by  the  company  own- 
ing the  road,  since  such  company 
could  itself  have  made  such  expendi- 
ture. Veatch  v.  American  Loan  & 
T.  Co.  49  U.  S.  App.  191,  79  Fed,  Rep. 
471,  25  C.  C.  A.  39. 

The  holder  of  a  judgment  against 
a  railroad  company  for  negligent 
death  is  not  entitled  to  preference 
over  mortgage  indebtedness  in  the 
assets  in  the  hands  of  a  receiver,  be- 
cause execution  and  levy  upon  the 
judgment  were  prevent«a  by  a  writ 
of  error  and  supersedeas,  on  the 
ground  that  the  surety,  having  saved 
the  property  from  seizure  and  sale, 
is  entitled  to  protection,  and  such 
creditor  can  avail  himself  of  such 
equity,  as  the  surety,  having  re- 
quired no  indemnity,  must  be  held 
to  have  signed  the  bond  on  the  per- 
sonal credit  and  responsibility  of  the 
principal.  'Seic  York  Security  d  i'. 
Co.  V.  Louisville,  E.  d  St.  L.  C.  R.  Co. 
79  Fed.  Rep.  380. 

For  taxes. 

City  taxes  assessed  against  a  mu- 
tual insurance  company  after  it  had 
ceased  to  do  business  and  before  the 
filing  of  a  petition  for  the  forfeiture 
of  its  charter  are  entitled  to  a  pref- 
erence in  the  funds  in  the  hands  of  a 
receiver,  under  R.  1.  Gen.  Laws.  chap. 
50,  §  3,  providing  that  when  any  per- 
son  (which  includes  a  corporation )_ 


CLAIMS  AGAINST  RECEIVERSHIP  FUNDS. 


842 


shall  become  insolvent  to\vn  taxes 
shall  have  preference  over  general 
debts.  Insurance  Commissioner  v. 
Commercial  Mut.  Ins.  Co.  20  R.  I.  7. 
The  absence  of  any  effectual  stat- 
utory method  for  the  enforcement  of 
tax  liens  which  have  accrued  at  the 
time  of  the  appointment  of  a  receiver 
of  an  insolvent  corporation  under  the 
New  Jersey  corporation  act  189G 
does  not  prevent  the  allowance  of 
such  liens  as  a  preferred  claim,  as 
the  possession  of  the  assets  of  the 
corporation  by  the  court  through  the 
receiver  for  distribution  is  in  itself 
a  clear  source  of  jurisdiction  for  the 
enforcement  of  the  lien.  Duryee  v. 
United  States  Credit  System  Co.  55 
N.  J.  Eq.  311. 

For  labor,  supplies,  and  other  operat- 
ing expenses. 

For  labor  claims  allowed,  see 
Putman  v.  Jacksonville,  L.  &  St.  L. 
R.  Co.  61  Fed.  Rep.  440. 

A  percentage  on  sales  allowed  an 
employee  of  a  corporation  in  addi- 
tion to  his  regular  stated  salary 
constitutes  a  part  of  his  salary,  un- 
der X.  Y.  Laws  1885,  chap.  376,  giv- 
ing employees  of  corporations  of 
which  a  receiver  has  been  appointed 
the  right  to  payment  of  wages  out 
of  the  money  which  first  comes  into 
the  receiver's  hands.  Re  Luxton  & 
D.  Co.  35  App.  Div.  243. 

A  traveling  salesman  of  a  corpo- 
ration under  a  contract  of  employ- 
ment by  the  year  is  within  N.  Y. 
Laws  1885,  chap.  376,  providing  that 
where  a  receiver  of  a  domestic  corpo- 
ration shall  be  appointed  the  wages 
of  the  "employees"  shall  be  preferred 
to  all  other  claims.  Re  Fitzgerald, 
21  Misc.  226,  Disapproving  Re 
Strylcer,  73  Hud,  327. 

An  employee  of  a  corporation  un- 
der a  contract  of  employment  by  the 
year  is  not  negligent,  so  as  to  de- 
prive him  of  a  preference  for  his 
wages  on  the  appointment  of  a  re- 
ceiver a  month  after  the  expiration 
of  the  year,  where  his  wages  were 
not  due  until  the  ond  of  the  year,  un- 
der N.  Y.  Laws  188.1.  chap.  376,  giv- 
ing a  preference  to  the  wages  of  em- 
ployees on  the  appointment  of  a  re- 
ceiver for  a  corporation.  Ibid,  Dis- 
tinguishing Re  Scott,  148  N.  Y.  588. 


One  employed  by  a  manufacturing 
corporation  to  set  up,  take  down, 
and  repair  reapers  and  mowers,  and 
to  unpack  and  repack  them,  is  with- 
in N.  Y.  Laws  1885,  chap.  376,  pro- 
viding that  where  a  receiver  of  a  cor- 
poration organized  and  doing  busi- 
ness in  the  state,  other  than  insur- 
ance and  moneyed  corporations,  shall 
be  appointed,  the  wages  of  the  em- 
ployees, operatives,  and  laborers 
thereof  shall  be  preferred,  although 
he  was  also  employed  to  sell  ma- 
chines. Palmer  v.  Van  Santvoord^ 
17  App.  Div.  194. 

A  manager  of  a  manufacturing 
corporation,  who  does  not  engage  in 
the  performance  of  manual  labor,  or 
render  any  other  service  than  the 
general  supervision  of  the  affairs  of 
the  company,  is  not  an  employee 
within  N.  Y.  Laws  1885,  chap.  376, 
giving  a  preference  to  employees  for 
wages  in  the  funds  in  the  hands  of  a 
receiver  of  the  corporation.  Re 
American  Lace  &  t\  P.  Works  Direct- 
ors, 30  App.  Div.  321. 

A  traveling  salesman  for  a  firm  is 
an  employee  within  the  New  York 
statute,  and  entitled  to  a  preference 
for  his  wages,  on  a  dissolution  of  the 
firm  and  the  appointment  of  a  re- 
ceiver. Mayer  v.  Stern,  47  N.  Y. 
Supp.  965. 

Debts  due  the  employees  of  a  rail- 
road company  at  the  time  a  receiver 
of  all  its  property  is  appointed,  up- 
on the  application  of  tlie  mortgagee 
in  an  action  to  foreclose  his  mort- 
gage, have  a  preference  in  equity 
over  any  claim  of  the  mortgagee  in 
the  earnings  which  may  come  to  the 
receiver  while  he  is  so  operating  the 
road.  Franklin  Trust  Co.  v.  Yorf/i- 
ern  Adirondack  R.  Co.  11  App.  Div. 
249. 

A  receiver  appointed  to  take  pos- 
session of  and  operate  a  railroad 
pending  foreclosure  of  a  mortgage 
thereon,  and  to  make  all  repairs,  and 
keep  up  a  proper  standing  of  effi- 
ciency, and  pay  all  such  expenses 
out  of  the  assets,  income,  and  profits, 
is  entitled  to  a  credit  for  expendi- 
tures for  necessary  repairs  and 
taxes,  as  against  employees  of  the 
road  having  chilnis  for  wages  due  at 
the  time  of  liis  appointnicnt,  there 
being   no   direclion   in   the   order  of 

137 


%Ui 


RECEIVERSHIPS— SUPPLEMENT. 


his  appointment  for  paying  such 
claims.     Ibid. 

A  receiver  appointed  in  an  action 
for  the  foreclosure  of  a  mortgage  up- 
on a  railroad,  to  take  possession  of 
the  road  and  operate  the  same  pend- 
ing the  action,  is  not  such  a  receiver 
as  is  contemplated  by  N.  Y.  Laws 
1885,  chap.  376,  providing  that  where 
a  receiver  of  a  corporation  shall  be 
appointed  the  wages  of  employees 
shall  be  preferred  to  any  other  debt 
or  claim  against  the  corporation, 
and  shall  be  paid  by  the  receiver 
from  the  moneys  of  such  corporation 
which  shall  first  come  to  his  hands. 
Ibid. 

The  provision  in  Burns's  (Ind.) 
Rev.  Stat.  1894,  §  7058,  which  makes 
all  debts  due  any  person  for  manual 
or  mechanical  labor  a  preferred 
claim  against  a  corporation  whose 
property  is  in  the  hands  of  a  receiv- 
er, does  not  include  contractors  en- 
gaged to  complete  certain  work  for 
an  agreed  sum.  Anderson  Driving 
Park  Asso.  v.  Thompson,  18  Ind. 
App.  458. 

The  usual  rule  is  to  give  claims 
for  materials  and  labor  for  six 
months  preceding  the  appointment 
of  a  receiver  of  a  railroad  corpora- 
tion preference  over  prior  bonds. 
Rutherford  v.  Pennsylvania  Midland 
R.  Co.  178  Pa.  38. 

A  creditor  of  a  corporation  on  ac- 
count of  material  and  labor  fur- 
nished more  than  six  months  prior  to 
the  appointment  of  a  receiver  can- 
not complain  of  the  action  of  the 
court  in  permitting  the  issuance  of 
receiver's  certificates  to  be  liens  on 
the  property  prior  to  the  mortgage 
bonds,  on  account  of  similar  claims 
accruing  within  the  six  months. 
lUd. 

A  chemist  performing  services  in 
his  profession  in  the  analysis  of  met- 
als for  an  iron  company  is  not  en- 
titled to  preference  as  a  laborer  to 
funds  in  the  hands  of  a  receiver  of 
such  company  under  the  Pennsyl- 
vania wages  act,  although  the  same 
work  miglit  have  been  done  by  any 
ordinarily  intelligent  man.  Culluni 
V.  Lickdale  Iron  Co.  5  Pa.  Dist.  R. 
622. 

Claims  for  labor  performed  for  a 
corporation  are  not  entitled  to  pri- 
138 


ority  in  a  fund  in  the  hands  of  the 
receiver  of  a  copartnership,  arising 
out  of  the  sale  by  him  of  its  property 
to  the  corporation,  discharged  of  all 
liens  against  the  partnership,  under 
Iowa  Laws  23d  Gen.  Assem.  chap.  48, 
Iowa  Code,  §  3079.  Haw  v.  Burch 
(Iowa)  77  N.  W.  401. 

The  receiver  of  a  manufacturing 
company  can  derive  no  authority  of 
the  court,  except  in  railway  cases, 
to  pay  labor  claims  in  preference  to 
the  liens  of  mortgages.  Merchants' 
Bank  v.  Moore,  100  Ala.  646. 

The  purchase  price  of  products 
sold,  in  the  hands  of  a  receiver,  is  a 
fund  to  which  employees  whose 
wages  accrued  within  six  months 
have  priority.  Drennen  v.  Merean- 
tile  Trust  d  Deposit  Co.  115  Ala.  592, 
39  L.  R.  A.  623. 

Employees  of  a  corporation  in  the 
hands  of  a  receiver  on  foreclosure  of 
a  mortgage  have  a  perfect  equity  to 
priority  of  payment  of  wages  earned 
within  six  months  before  the  receiv- 
er's appointment,  when  the  funds 
from  which  they  ought  to  have  bee.i 
paid  have  been  used  for  the  benefit 
of  the  bondholders,  even  if  the  terms 
of  the  mortgage  embrace  income. 
Ibid. 

Labor  necessary  to  the  continua- 
tion of  the  business  of  a  corporation 
does  not  entitle  the  workmen  to  pri- 
ority of  payment  out  of  the  assets 
of  a  receiver  on  foreclosure  of  a 
mortgage,  if  the  labor  is  not  shown 
to  have  been  to  the  advantage  of  the 
bondholders,  or  necessary  in  conser- 
vation of  their  interests,  or  if  the 
receiver  has  not  realized  any  income 
out  of  which  the  wages  should  be 
paid.     Ibid. 

Mere  casual  and  incidental  re- 
pairs to  remedy  defects  caused  by 
current  use  are  not  improvements  or 
betterments  within  the  rule  which 
gives  priority  to  wages  out  of  the  as- 
sets of  a  receiver  of  a  corporation 
when  funds  that  should  have  been 
used  to  pay  wages  have  gone  into 
improvements.     Ibid. 

Assignees  of  employees  may  have 
their  priority  of  payment  out  of  the 
assets  of  a  receiver.     Ibid. 

A  receiver  of  an  insolvent  corpo- 
ration appointed  under  the  general 
equity  powers  of  the  court  will  rec- 


CLAIMS  AGAINST  RECEIVERSHIP  FUNDS. 


§  343 


ognize  and  enforce  preferences  which 
would  be  accorded  to  taxes  and  debts 
due  to  workmen  for  labor  in  a  legal 
proceeding.  Jones  v.  Arena  Publish- 
ing Co.  171  Mass.  22. 

A  purchaser  of  partnership  prop- 
erty at  a  sale  under  foreclosure  of  a 
deed  of  trust,  while  the  property  was 
in  the  hands  of  a  receiver  appointed 
in  an  action  to  dissolve  the  firm,  is 
estopped  to  assert  his  title  to  defeat 
a  charge  upon  the  property  in  favor 
of  persons  who  furnished  the  sup- 
plies to  the  receiver  necessary  to  the 
operation  of  the  business  of  the  firm, 
•while  the  property  remained  in  his 
possession  with  the  consent  of  the 
purchaser  pending  an  appeal  from  an 
order  directing  him  to  turn  the  same 
over  to  the  purchaser.  Knicker- 
hacker  v.  McKindley  Coal  &  M.  Co. 
172  111.  535,  Affirming  67  111.  App. 
291. 

The  lien  of  employees  of  a  firm, 
for  labor  performed  by  them,  is  su- 
perior to  the  lien  of  a  mortgage  on 
personal  property  belonging  to  the 
firm,  where  the  partnership  goes  in- 
to the  hands  of  a  receiver,  under  i2 
Starr.  &  C.  (111.)  Stat.  p.  25S6,  pro- 
viding that  when  the  business  of  any 
firm  is  put  into  the  hands  of  a  re- 
ceiver the  debts  owing  to  laborers  for 
labor  shall  be  treated  as  preferrel 
claims  and  be  first  paid  in  full. 
Dolese  v.  Shepard  (111.)  2  Chic.  L. 
J.  Wkly.  478,  Citing  Reynolds  v. 
Black,  91  Iowa,  1 ;  Piatt  v.  Union  P. 
R.  Co.  99  U.  S.  48,  25  L.  ed.  424; 
Walker  v.  Whitehead,  IG  Wall.  314, 
21  L,  ed.  357. 

The  amount  due  for  material  used 
in  the  construction  of  rolling  stock 
is  entitled  to  priority  over  the  mort- 
gage. St.  Louis,  A.  d  S.  R.  Co.  v. 
Cretcs,  75  111.  App.  496. 

And  so  as  to  labor  and  material 
necessary  to  keep  a  railroad  a  going 
concern.  Cleveland,  C.  &  S.  R.  Co. 
V.  Knickerbocker  Trust  Co.  86  Fed. 
Rep.  73 :  Southern  R.  Co.  v.  Carnegie 
Steel  Co.  76  Fed.  Rep.  492,  42  U.  S. 
App.  145,  22  C.  C.  A.  289. 

And  as  to  the  cost  of  replacing  an 
old  bridge  where  it  has  become  un- 
safe. Cleveland,  C.  &  S.  R.  Co.  v. 
Knickerbocker  Trust  Co.  80  Fed. 
Rep.  73 ;  Southern  R.  Co.  v.  Ameri- 
can Brake  Co.  76  Fed.  Rep.  502,  42 


U.  S.  App.  162,  22  C.  C.  A.  298; 
Southern  R.  Co.  v.  Adams,  42  U.  S. 
App.  167,  76  Fed.  Rep.  504,  22  C.  C. 
A.  300. 

A  corporation  which  assumes  the 
operation  of  the  railroad  of  another 
corporation  by  its  lessee,  all  the 
earnings  of  both  roads  being  depos- 
ited in  a  common  fund  out  of  which 
wages  and  supplies  are  purchased 
generally  by  the  lessee  for  the  bene- 
fit of  both  roads,  is  not  entitled  to  a 
lien  for  supplies  and  labor  furnished 
for  the  amount  shown  to  be  due  from 
the  company  for  which  such  road  is 
operated,  upon  its  assets  in  the 
hands  of  a  receiver,  but  such  amount 
is  for  money  advanced.  United 
States  Trust  Co.  v.  Western  Con- 
tract Co.  54  U.  S.  App.  67,  81  Fed. 
Rep.  454,  26  C.  C.  A.  472. 

The  compensation  of  the  manager 
and  of  the  secretary  and  treasurer 
of  a  corporation  is  not  within  Va. 
Code,  §  2485,  giving  a  lien  upon  the 
personal  property  of  a  mining  or 
manufacturing  corporation  for 
wages,  so  as  to  entitle  him  to  a  lien 
upon  its  assets  in  the  hands  of  a  re- 
ceiver. Fidelity  Ins.  Trust  d  S.  D. 
Co.  V.  Roanoke  Iron  Co.  81  Fed.  Rep. 
439. 

A  transfer  by  an  iron  company,  of 
which  a  receiver  is  afterwards  ap- 
pointed, of  iron,  accompanied  by  a 
bill  of  lading,  to  factors  who  make 
advances  thereon  and  are  to  sell  the 
same  and  account  therefor  to  the 
company,  deprives  the  company  of 
any  property  in  the  iron,  to  which 
the  lien  given  by  Va.  Code,  §  2485, 
upon  the  personal  property  of  a  man- 
ufacturing company  for  supplies  can 
attach.     Ihid. 

Labor  claims  against  a  railroad, 
which  accrued  more  than  six  months 
before  the  appointment  of  a  receiver, 
cannot  be  given  priority  of  payment 
out  of  the  funds  in  his  hands. 
Thomas  v.  Cincinnati,  N.  0.  d  T.  P. 
It.  Co.  91  Fed.  Rep.  195. 

Services  of  a  laborer  in  repairs 
and  improvements  upon  a  water- 
works cannot  be  given  preference 
to  a  mortgage  lien  in  the  assets 
in  tlic  liands  of  a  rcceivcM-,  where 
tlieio  is  no  diversion  of  income.  At- 
lantic Trust  Co.  V.  Woodbridgv  Canal 
&  Irrig.  Co.  79  Fed.  Rep.  39. 

139 


342 


RECEIVERSHIPS— SUPPLEMENT. 


Expenses  of  proceedings  to  record 
a  mechanic's  lien  cannot  be  given 
preference  in  funds  in  the  hands  of 
a  receiver,  where  all  claim  to  prefer- 
ence is  based  upon  the  ground  that 
the  nature  of  the  services  rendered 
gives  them  an  equity  superior  to  that 
possessed  by  the  bondholders,  and 
not  upon  the  fact  of  the  lien  ac- 
quired. Atlantic  Trust  Co.  v.  Wood- 
hridyc  Canal  d  I  nig.  Co.  86  Fed. 
Rep.  975. 

Services  of  a  laborer  in  construc- 
tion of  waterworks  cannot  be  given 
a  preference  in  the  assets  in  the 
hands  of  a  receiver  to  a  mortgage 
lien.  Atlantic  Trust  Co.  v.  Wood- 
bridge  Canal  <£-  Irrig.  Co.  79  Fed. 
Rep.  39. 

Preference  for  the  construction  of 
an  extension  canal  system  cannot 
be  given  in  funds  in  the  hands  of  a 
receiver  of  the  canal  company,  on 
the  ground  tliat  they  were  incurred 
to  keep  the  system  a  going  concern, 
because  prior  to  such  extension  the 
company-  was  not  a  paying  concern, 
where  it  does  not  appear  that  the 
property  was  thereby  placed  upon  a 
paying  basis.  Atlanta  Trust  Co.  v. 
Woodhridge  Canal  &  Irrig.  Co.  86 
Fed.  Rep.  975. 

A  claim  for  services  rendered 
purely  in  constructing  an  addition 
to  a  system  of  canals  which  was 
never  completed  or  in  operation  can- 
not be  given  preference  in  funds  in 
the  hands  of  a  receiver  over  claims 
of  bondholders.     Ihid. 

Services  or  materials  rendered  in 
extending  a  system  of  canals  owned 
by  a  corporation  are  not  necessary 
to  the  preservation  of  the  existing 
canals  and  ditches,  so  as  to  give  a 
claim  therefor  priority  in  the  funds 
in  the  hands  of  a  receiver  appointed 
in  a  mortgage  foreclosure.     Ibid. 

Services  of  a  laborer  in  the  opera- 
tion of  a  waterworks,  keeping  it  a 
going  concern,  may  be  entitled  to 
preference  even  out  of  the  corpus  of 
the  assets  in  the  hands  oi  a  receiver 
over  a  mortgage  lien.  Atlantic 
Trust  Co.  V.  Woodhridge  Canal  & 
Irrig.  Co.  79  Fed.  Rep.  39. 

A  lien  for  laborer's  wages  taking 
precedence  of  mortgages  in  assets  in 
a  receiver's  hands  under  the  Vir- 
ginia statute  is  invalid  when  based 
140 


upon  notes  given  by  a  corporation 
for  labor,  and  there  is  notliing  to 
show  wlien  the  labor  was  performed 
or  when  the  claims  therffor  were 
due,  as  the  statute  does  not  contem- 
plate that  the  company  may  give  its 
note,  and  that  when  such  note  is  due 
ninety  days  shall  be  allowed  there- 
after to  hie  a  memorandum  of  the 
lien.  Liberty  Perpetual  BIdg.  tC-  L. 
Co.  V.  M.  A.  Furbush  &  tion  Mach. 
Co.  42  U.  S.  App.  G31,  80  Fed.  Rep. 
031,  26  C.  C.  A.  38,  Citing  Boston  v. 
Chesapeake  &  0.  R.  Co.  76  Va.  182; 
ShacJcleford  v.  Beck,  80  Va.  573; 
Mayes  v.  Ruffners,  8  W.  Va.  384; 
Phillips  V.  Roberts,  26  W.  Va.  783; 
Davis  V.  Livingston,  29  Cal.  283; 
Hooper  v.  Flood,  54  Cal.  218;  Noll 
V.  Sicineford,  6  Pa.  187:  Wit  man  v. 
Walker,  9  Watts  &  S.  186;  Thomas  v. 
Barber,  10  Md.  380;  Delaicare  R. 
Constr.  Co.  v.  Davenport  c6  ^t.  P.  R. 
Co.  40  Iowa,  406;  Valentine  v.  Raw- 
son,  57  Iowa,  179;  Lyon  v.  'New  York 
&  N.  E.  R.  Co.  127  Mass.  101 ;  Mul- 
loy  V.  Lawrence,  31  Mo.  583;  Cook  v. 
Vreeland,  21  111.  431;  Vane  v.  New 
combe,  132  U.  S.  220,  33  L.  ed.  310; 
Van  Stone  v.  Stillicell  &  B.  Mfg.  Co. 
142  U.  S.  128,  35  L.  ed.  961. 

Services  in  the  construction  of 
lateral  ditches  from  the  main  canals 
of  an  irrigating  system  are  not  en- 
titled to  preference  over  a  mortgage 
debt  in  the  assets  in  the  hands  of  a 
receiver,  on  the  ground  that  such 
laterals  are  extended  from  time  to 
time  as  required  in  the  actual  opera- 
tion of  such  system.  California 
Safe  Dcp.  &  T.  Co.  v.  Yakima  Invest. 
Co.  82  Fed.  Rep.  542. 

Services  of  a  civil  engineer,  per- 
formed in  the  original  construction 
of  the  works  of  an  irrigating  com- 
pany, do  not  constitute  a  claim  en- 
titled to  preference  over  a  mortgage 
debt  in  the  funds  in  the  hands  of  a 
receiver.     Ibid. 

Employees  are  not  creditors  at 
large,  but,  as  against  mortgagees, 
will  be  preferred  out  of  earnings  and 
corpus.  Duncan  v.  Chesapeake  & 
0.  R.  Co.  (Va.)  9  Am.  Ry.  Rep.  386. 

The  court  refuses  to  give  claims 
for  labor  preference  to  all  others. 
Case  V.  Fredrickson,  63  Wis.  501. 

The  lien  given  by  Va.  Code,  § 
2485,  to  supply  creditors  in  prefer- 


CLAIMS  AGAINST    RECEIVERSHIP  FUNDS. 


t^  342 


ence  to  any  lien  by  deed  of  trust, 
mortgage,  hypothecation,  sale,  or 
conveyance  preA'iously  made,  in  the 
assets  of  a  receivership,  takes  prece- 
dence of  a  pledge  to  a  warehouse 
company  to  secure  advances  made 
after  the  passage  of  such  statute. 
Fidelity  Ins.  Trust  d  8.  D.  Co.  v. 
Roanoke  Iron  Co.  81  Fed.  Rep.  439. 

Goods  furnished  a  commissary 
store  conducted  by  an  iron  company, 
upon  which  it  frequently  gave  its 
employees,  in  payment  of  their 
wages,  orders  for  goods  and  supplies, 
are  not  within  Va.  Code,  §  2485,  giv- 
ing a  lien  upon  the  property  of  a 
mining  and  manufacturing  com- 
pany for  supplies  necessary  to  its 
operation,  so  as  to  give  a  lien  upon 
its  assets  in  a  receivers'  hands, 
where  the  company  is  located  in  a 
city  where  supplies  of  every  kind  are 
readily  accessible  to  its  employees, 
and  not  in  so  remote  a  locality  that 
furnishing  by  it  of  supplies  to  its 
employees  is  necessary.     Ibid. 

Freight  charges  on  supplies  by  a 
railroad  comjDany  against  a  manu- 
facturing company,  of  which  a  re- 
ceiver is  afterwards  appointed,  are 
not  within  Va.  Code,  §  2485,  giving 
to  a  person  furnishing  supplies  to  a 
mining  or  manufacturing  company  a 
prior  lien  upon  its  personal  property 
to  the  liens  of  mortgages  or  other 
transfers.     Ibid. 

The  right  of  a  preference  over 
mortgage  bondholders  of  one  furnish- 
ing supplies  to  a  cable  street-railway 
company  in  Colorado  is  not  waived 
by  suing  such  company  in  the  courts 
of  New  York  before  receivers  are  ap- 
pointed, although  the  suit  is  prose- 
cuted to  judgment  after  his  appoint- 
ment. Central  Trust  Co.  v.  Clark,  49 
U.  S.  App.  453,  81  Fed.  Rep.  269,  26 
C.  C.  A.  397. 

Priority  may  be  given  in  funds  in 
the  hands  of  a  receiver  to  supply 
bills  furnished  shortly  before  or  aft- 
er his  appointment,  although  he 
was  originally  appointed  upon  the 
application  of  a  stock  and  bondhold- 
er merely  to  hold  the  system  intact 
and  protect  the  company  from  its 
creditors,  where  the  mortgagees  liave 
come  in,  asked  for  a  receiver,  and 
had  tlie  existing  receivership  modi- 
fied so  as  to  give  it  retroactive  effect 


as  of  the  time  of  its  original  creation. 
J\'eto  England  R.  Co.  v.  Carnegie 
Steel  Co.  33  U.  S.  App.  491,  75  Fed. 
Rep.  54,  21  C.  C.  A.  219. 

A  provision  for  the  sequestration 
by  foreclosure  of  the  income  of  a 
railroad  for  the  benefit  of  the  bond- 
holders will  not  prevent  the  income 
from  being  charged  with  the  prior 
equity  of  unpaid  supply  claimants 
until  a  strict  foreclosure  or  a  sale  of 
the  road.  Virginia  &  A.  Coal  Co.  v. 
Central  R.  d  Bkg.  Co.  170  U.  S.  355, 
42  L.  ed.  1068. 

Supplies  furnished  a  lessee  of  a 
road  are  entitled  to  a  preference  over 
payments  made  by  such  lessee  on  the 
interest  of  outstanding  bonds  of  the 
lessor.  Southern  R.  Co.  v.  Tillett, 
42  U.  S.  App.  173,  76  Fed.  Rep.  507, 
22  C.  C.  A.  303. 

Persons  selling  personal  property 
to  a  receiver  carrying  on  the  busi- 
ness of  a  corporation,  with  knowl- 
edge of  the  order  of  court  under 
which  he  is  acting,  cannot  claim  a 
return  of  a  portion  of  the  property 
not  used,  but  stand  on  the  same  foot- 
ing as  other  creditors  who  furnished 
supplies.  Lewis  v.  Linden  Steel  Co. 
27  Pitts.  L.  J.  N.  S.  395. 

Labor  and  materials  used  in  re- 
building the  pier  and  abutments  of  a 
railroad  bridge  are  within  an  order 
directing  receivers  to  pay  out  of  net 
income  claims  for  materials  and  sup- 
plies accruing  within  six  months. 
Cleveland  C.  &  8.  R.  Co.  v.  Knicker- 
bocker Trust  Co.  86  Fed.  Rep.  73. 

Supplies  for  the  purpose  of  recon- 
structing a  railroad  cannot  be  given 
preference  in  the  assets  in  a  receiv- 
er's hands  to  a  mortgage,  even  on  the 
ground  that  they  must  have  en- 
hanced the  value  of  the  bondholders' 
security.  Lackawanna  Iron  &  C.  Co. 
v.  Farmers'  Loan  d  T.  Co.  52  U.  S. 
App.  91,  79  Fed.  Rep.  202,  24  C.  C. 
A.  487 ;  Morgan's  L.  d  T.  R.  d  8.  8. 
Co.  v.  Fanners'  Loan  d  T.  Co. 
52  U.  S.  App.  107,  79  Fed.  Rep.  210, 
24  C.  C.  A.  495 ;  Southern  Develop- 
ment Co.  V.  Farmers'  Loan  d  T.  Co. 
52  U.  S.  App.  Ill,  79  Fed.  Rep.  212, 
24  C.  C.  A.  497.  » 

The  court  may  reject  the  claim  of 
a  mining  corporation,  wliich  has  no 
basis  except  in  equity,  to  the  pay- 
ment out  of  the  assets  in  the  hands 

141 


§  342 


EECEIVERSHIPS— SUPPLKMENT. 


of  the  receiver  of  a  railroad  corpora- 
tion of  a  bill  for  coal  furnished  to 
the  company  within  three  months  be- 
fore the  appointment  of  the  receiver, 
Avhere  the  mining  company  is  prac- 
tically identical  with  another  rail- 
road company  which  has  assumed 
the  paj-ment  of  the  current  expenses 
of  tiie  first  railroad  company,  al- 
though the  two  are  legally  distinct. 
Guaianttc  Trust  d-  S.  D.  Co.  v.  Fhila- 
ihiphia  R.  d  N.  E.  R.  Co.  31  App. 
Div.  511. 

Receivers  of  a  railroad  company, 
under  an  order  directing  payment  of 
claims  for  supplies  furnished  on  or 
after  a  certain  date,  practically  six 
months  before  the  receivership,  can- 
not pay  claims  incurred  for  supplies 
delivered  to  a  carrier,  consigned  to 
the  railroad  company,  before  such 
date,  but  falling  due  thereafter. 
Belknap  v.  Central  Trust  Co.  47  U. 
S.  App.  6G3,  sub  nam.  Central  Trust 
Co.  v.  East  Tennessee,  V.  <C-  G.  R.  Co. 
80  Fed.  Rep.  624,  26  C.  C.  A.  30. 

Claims  for  advertising  cannot  be 
given  precedence  of  a  mortgage  debt 
as  for  supplies.     Ihid. 

jMoney  in  the  hands  of  a  receiver 
of  an  insolvent  corporation  derived 
solely  from  collection  of  book  ac- 
counts after  his  appointment,  can- 
not be  subjected  to  a  trust  in  favor 
of  one  who  furnished  the  corpora- 
tion's employees  with  supplies,  un- 
der an  agreement  for  the  retention 
by  the  company  of  enough  of  their 
wages  to  pay  for  the  supplies. 
Arrwld  v.  Porter,  122  N.  C.  242. 

Receivers'  debts  which  can  displace 
contract  liens  upon  the  property  of 
a  railroad  must  be  the  necessary 
operating  expenses.  Belknap  v. 
Central  Trust  Co.  47  U.  IS.  App.  663, 
sub  nom.  Central  Trust  Co.  v.  East 
Tennessee,  Y.  &  G.  R.  Co.  80  Fed. 
Rep.  624,  26  C.  C.  A.  30. 

The  doctrine  preferring  claims 
against  a  railroad  company  to  mort- 
gage indebtedness  out  of  the  assets 
in  the  hands  of  a  receiver  cannot  be 
extended  to  any  other  claims  than 
those  growing  out  of  debts  neces- 
sarily incurred  in  keeping  the  road 
in  operation.  Neio  York  Security  £ 
T.  Co.  V.  Louisville,  E.  &  St.  L.  C.  R. 
Co.  79  Fed.  Rep.  386. 

Where  the  expenses  are  limited 
142 


to  the  income  the  court  will  not  make 
them  a  lien  superior  to  the  mort- 
gage. United  States  Trust  Co.  v. 
/Yeio  York,  W.  S.  d  B.  R.  Co.  2.5  Fed. 
Rep.  800. 

Plaintiff  in  an  action  to  foreclose 
a  mortgage  given  by  a  railroad  com- 
pany to  secure  its  bonds,  who  ob- 
tains an  order  appointing  a  receiver 
and  providing  that  he  may  pay  in- 
debtedness theretofore  incurred  for 
current  expenses  of  oj^eration  dur- 
ing the  three  months  next  preceding 
the  date  of  the  order,  assents  to  the 
payment  of  such  debts  out  of  the 
property  in  court  as  in  equity  should 
be  so  paid.  Guarantee  Trust  dc  S. 
D.  Co.  V.  Philadelphia,  R.  &  A*.  E.  R. 
Co.  31  App.  Div.  511. 

Expenses  incurred  after  the  sale 
cannot  be  made  a  lien  antedating 
the  decree.  Bassick  Min.  Co.  v. 
Schoolfield,  15  Colo.  376. 

Expenses  of  operation  are  entitled 
to  priority  over  a  mortgage.  Farm- 
ers' d  M.  1^'at.  Bank  v.  IVaco  Electric 
R.  d  Light  Co.  (Tex.  Civ.  App.)  36 
S.  W.  131 :  Re  Atlas  Iron  Constr.  Co. 
19  App.  Div.  415. 

And  so  as  to  the  lien  of  a  land- 
lord. Read  v.  Corcoran,  1  Ir.  Ch. 
Rep.  235. 

The  current  operating  expenses  of 
mortgaged  railroads  for  a  limited 
time  before  the  appointment  of  a  re- 
ceiver under  a  bill  to  foreclose  the 
mortgage  may  be  charged  upon  the 
income  earned  during  the  receiver- 
ship, or  upon  the  corpus  of  the  prop- 
ertj',  as  liens  superior  to  that  of  the 
mortgasre.  Atnes  v.  Union  P.  R.  Co. 
74  Fcd.'Rep.  335. 

And  this  includes  expenses  for  a 
limited  time  before  the  bill  was  liled. 
Davis  V.  Denby,  3  Madd.  170:  Ames 
V.  Union  P.  R.  Co.  74  Fed.  Rep.  335. 

Operating  expenses  incurred  by  a 
railroad  company  within  a  reason- 
able time  before  the  appointment  of 
a  receiver  in  a  foreclosure  suit, 
whether  before  or  after  the  execution 
of  the  trust  deed,  are  entitled  to  a 
preference  over  the  trust  deed,  where 
the  earnings  subsequently  diverted 
to  pay  for  permanent  improvements, 
together  with  those  in  the  master's 
hands,  exceed  the  amount  thereof. 
Central  Trust  Co.  v.  Utah  C.  R.  Co. 
16    Utah,     12,    Citing    Fosdick    v. 


CLAIMS  AGAINST    RECEIVERSHIP  FUNDS. 


§  34^ 


Schall,  99  U.  S.  235,  25  L.  ed.  339; 
Burnham  v.  Boicen,  111  U.  S.  776, 
28  L.  ed.  59G;  Union  Trust  Co.  v. 
Souther,  107  U.  S.  591,  27  L.  ed.  488; 
Litzenherger  v.  Jarvis-Conklin  Trust 
Co.  8  Utah,  16;  Farmers'  Loan  &  T. 
Co.  V.  Kansas  City,  W.  &  N.  W.  R. 
Co.  53  Fed.  Rep.  182. 

Debts  for  coal  delivered  to  a  rail- 
road company  for  the  purpose  of  the 
operation  of  the  road  are  current 
debts  for  operating  expenses,  and  are 
a  preferred  charge  upon  the  income 
of  the  receivership.  Virginia  &  A. 
Coal  Co.  V.  Central  R.  &  Bkg.  Co.  30 
U.  S.  App.  263,  suh  nom.  Clark  v. 
Central  R.  d  Bkg.  Co.  66  Fed.  Rep. 
803,  14  C.  C.  A.  112. 

That  coal  delivered  on  the  lines  of 
a  railroad  and  used  in  the  operation 
of  the  road  was  purchased  by  the 
lessee  of  the  road,  which  was  bound 
by  the  terms  of  the  lease  to  pay  cur- 
rent expenses,  does  not  affect  the 
right  of  the  seller  of  the  coal  to  a 
preference  in  payment  therefor  out 
of  the  income  derived  by  a  receiver 
subsequently  appointed  for  the  les- 
sor.    Ibid. 

Claims  for  coal  purchased  and 
used  by  the  railroad  company  in  the 
operation  of  leased  lines  under  its 
control,  before  the  appointment  of 
a  receiver,  are  entitled  to  the  same 
preference  in  the  income  of  the  re- 
ceivership as  claims  for  coal  actual- 
ly used  on  the  company's  own  line. 
Ibid. 

A  claim  for  coal  purchased  for  and 
used  in  operating  a  railroad,  when 
the  parties  expected  payment  there- 
of out  of  the  current  earnings,  is  not 
excluded  from  preference  over  a 
mortgage  on  the  road  in  case  of  a 
subsequent  receivership,  because  of 
the  fact  that  the  purchase  was  not 
made  by  the  owner  of  the  road,  but 
by  another  party  who  was  in  control 
and  operation  thereof  under  a  lease, 
without  protest  or  interference  by 
the  bondholders.  Virginia  <C-  A.  Coal 
Co.  V.  Central  R.  &  Bkg.  Co.  170  U. 
S.  355,  42  L.  ed.  1068. 

Preference  over  a  mortgage  debt 
will  not  be  denied  a  claim  for  a  cable 
furnished  a  cable  street  railway,  be- 
cause it  was  purchased  twenty-six 
months  before  the  appointment  of  a 
receiver,  where  the  seller  commenced 


suit  about  twelve  months  thereafter, 
and  recovered  judgment  after  the  ap- 
pointment of  the  receiver,  as  the 
period  of  time  between  the  com- 
mencement of  such  action  and  the 
appointment  of  the  receiver  cannot 
properly  be  included  in  computing 
the  time  of  delay  in  making  the 
claim.  'Kew  York  Guaranty  <&  In- 
demnity Co.  V.  Broderick  d  B.  Rope 
Co.  48  U.  S.  App.  668,  sub  nom.  New 
York  Guaranty  &  Indemnity  Co.  v. 
Tacoma  R.  cC-  Motor  Co.  83  Fed.  Rep. 
365,  27  C.  C.  A.  550. 

A  claim  for  a  new  gear  wheel  and 
pinion  necessary  to  the  operation  of 
a  cable  railway  and  to  keep  it  a  go- 
ing concern  falls  within  the  cate- 
gory of  claims  generally  recognized 
as  of  a  preferential  character  and 
equitably  entitled  to  be  paid  in  ad- 
vance of  the  claims  of  mortgage 
bondholders, — especially  where  such 
wheel  and  pinion  have  been  mort- 
gaged in  thirty  days  after  their  de- 
livery to  meet  the  interest  obliga- 
tions of  such  mortgage  bondholders. 
Central  Trust  Co.  v.  Clark,  49  U.  S. 
App.  453,  81  Fed.  Rep.  269,  26  C.  C. 
A. 397. 

One  intervening  in  a  receivership 
of  a  street-railway  company  to  in- 
terpose a  claim  for  preference  over 
the  mortgage  indebtedness,  because 
of  the  circumstances  under  which 
machinery  was  supplied  to  such  com- 
pany, must  do  equity  by  allowing  the 
mortgage  bondholders  to  show  that 
they  were  not  benefited  to  the  extent 
of  the  full  value  of  the  machinery 
supplied,  by  reason  of  failure  to  de- 
liver the  same  within  the  contract 
period,  notwithstanding  a  judgment 
obtained  in  a  state  court  against  the 
company  for  the  full  contract  price, 
as,  in  order  to  obtain  a  preference, 
the  intervener  must  himself  go  be- 
hind such  judgment  and  show  the 
origin  and  nature  of  the  demand  on 
which  it  rests.     Ibid. 

When  track  rentals  are  not  al- 
lowed out  of  proceeds  of  foreclosure 
as  against  mortgagees.  Louisville 
d-  N.  R.  Co.  v.  Central  Trust  Co.  59 
U.  S.  App.  694,  87  Fed.  Rep.  500,  31 
C.  C.  A.  »\);  Mather  Humane  Stock 
Transp.  Co.  v.  Anderson,  46  U.  S. 
Ai)p.  138,  76  Fed.  Rep.  164,  22  C.  C. 
A.  109. 

143 


§  350 


RECEIVERSHIPS— SUPPLEMENT. 


The  claim  of  a  sleeping-car  com- 
pany under  a  contract  providing  that 
it  shall  furnish  cars  for  the  use  of 
a  railroad  company,  remaining  the 
owner,  and  having  the  right  to  col- 
lect fares  for  seats  and  berths,  the 
railroad  company  to  pay  a  certain 
sum  per  mile  for  each  mile  run  by 
such  cars, — is  one  for  car  rental, 
which  cannot  be  given  priority  over 
a  mortgage  debt,  in  funds  in  the 
hands  of  a  receiver.  Pullman's  Pal- 
ace-Car Co.  V.  Ajnaican  Loan  &  T. 
Co.  55  U.  S.  App.  170,  84  Fed.  Rep. 
18,  28  C.  C.  A.  263. 

The  rental  of  a  tunnel  under  a 
lease  adopted  by  the  court  and  its 
receivers,  and  declared  to  be  essen- 
tial to  the  receivership  and  opera- 
tion of  the  road,  is  properly  given  a 
preferential  lien  upon  the  assets  in 
the  hands  of  the  receivers.  Central 
Trust  Co.  v.  Continental  Trust  Co. 


58  U.  S.  App.  G04,  8G  Fed.  Rep.  517. 
30  C.  C.  A.  235. 

Rentals  of  telegraph  poles,  in  pos- 
session of  and  retained  by  a  third 
person  pending  a  dispute  as  to 
whether  or  not  they  are  within  the 
terms  of  a  mortgage  under  fore- 
closure, upon  sueli  person's  giving 
bond  to  the  mortgagee  to  pay  him 
such  rentals  in  case  the  decision  is 
in  his  favor,  will  belong  to  a  corpo- 
ration to  whom  the  receiver  ap- 
pointed for  the  mortgaged  property 
has  leased  the  entire  property  under 
I>ermission  of  the  court  for  a  fixed 
compensation,  and  not  to  the  mortga- 
gee, in  case  they  are  doterminc^d  to 
be  within  the  terms  of  the  mortgage. 
Western  U.  Tclcg.  Co.  v.  Boston  iiufc 
Dep.  d  T.  Co.  87  Fed.  Rep.  788. 

Rentals  due  before  appointment 
are  not  preferential  over  lien  credit- 
ors. Grand  Trunk  R.  Co.  v.  Central 
Vermo7it  R.  Co.  90  Fed.  Rep.  103. 


Page  582,  sec.  350. — Compensation. 


A  receiver  who  after  the  death  of 
a  coreceiver  continues  to  act,  and 
■whose  acts  were  ratified  by  the  court, 
is  entitled  to  commissions.  Bur- 
roughs V.  Bunnell,  70  Md.  18. 

A  receiver  is  entitled  to  a  com- 
mission on  deposit  notes  coming  into 
his  hands  and  surrendered  on  order 
of  court.  Van  Buren  v.  Chenango 
County  Mut.  Ins.  Co.  12  Barb.  071. 

Receivers  are  usually  allowed  such 
compensation  as  is  allowed  by  law  or 
by  contract  between  individuals  for 
similar  services,  to  be  ascertained  by 
proof,  but  not  from  opinions  of  wit- 
nesses. Stretch  v.  Gowdey,  3  Tenn. 
Ch.  565. 

A  receiver  is  entitled  to  commis- 
sions on  all  property  (personal)  of 
which  he  became  possessed  and 
which  he  transferred.  Bennett  v. 
Chapin,  3  Sandf.  673. 

Where  the  Federal  court  has 
passed  upon  and  allowed  a  receiver's 
compensation,  it  will  not  entertain 
a  petition  for  an  allowance  based  o.a 
a  finding  in  the  state  court  in  an- 
other case.  Re  Hinckley,  3  Fed.  Bep. 
556. 

Partial  or  intermediate  allowances 
144 


of  compensation  to  a  receiver,  or  his 
counsel,  of  an  insolvent  corporation, 
clothed  with  the  duty  of  winding  up 
its  aflairs  with  convenient  speed, 
should  be  materially  less  than  the 
value  of  the  services  rendered  by  the 
receiver  prior  to  the  making  of  such 
allowances;  and  the  final  allowance 
made  at  the  close  of  the  receivership 
should  be  so  adjusted  tliat  the  re- 
ceiver will  have  fair  and  just  com- 
pensation for  his  services  as  a  whole, 
notwithstanding  the  inadequacy  of 
the  partial  or  intermediate  allow- 
ances considered  by  themselves. 
Maxwell  v.  Wilmington  Dental  Mfg. 
Co.  82  Fed.  Rep.  214. 

The  receiver  of  a  mutual  insur- 
ance company  is  entitled  to  com- 
missions on  the  value  of  deposits 
or  premium  notes  coming  into  bis 
hands.  Van  Buren  v.  Chenango 
County  Mut.  his.  Co.  12  Barb.  071. 

The  want  of  foresight  in  regard 
to  the  future  development  of  the 
business  is  not  ground  for  refusing 
compensation  to  a  receiver.  Coicd- 
rey  v.  Galveston,  E.  &  II.  R.  Co.  1 
Woods,  331. 

A  compensation  of  8  per  cent  is 


RECEIVERS'    COMPENSATION. 


§  350 


not  uniform^  but  it  varied  with  each 
case.  Abbott  v.  Baltimore  d  R. 
Steam  Packet  Co.  4  Md.  Ch.  310. 

The  court  has  a  right  to  fix  the  ex- 
penses of  a  receivership  when  the 
appointment  is  made.  Hoicell  v. 
DaicsoH,  L.  R.  13  Q.  B.  Div.  67. 

The  compensation  of  a  temporary 
receiver  of  a  corporation  appointed 
under  X.  Y.  Code  Civ.  Proc.  §  2423, 
to  collect  and  receive  debts,  preserve 
the  property,  and  sell  or  otherwise 
dispose  of  the  property  as  directed 
by  the  court,  and  collect  and  preserve 
proceeds,  is  not  confined  to  cash  re- 
ceived by  him,  but  may  be  reckoned 
at  not  more  than  214  per  cent  of  the 
value  of  other  property  coming  into 
his  hands,  under  §  3320,  providing 
for  the  pajTnent  to  receivers  as  com- 
missions not  exceeding  5  per  cent  of 
the  "sums  received  and  disbursed" 
by  him.  Re  Wanen  E.  Smith  Co.  31 
App.  Div.  39. 

The  compensation  of  a  receiver 
and  the  expenses  of  the  receivership 
will  not  be  deferred  to  the  payment 
of  existing  liens,  where  the  appoint- 
ment of  the  receiver  is  legal,  al- 
though it  was  made  without  preju- 
dice to  the  pre-existing  liens,  and 
the  assets  are  insufficient  to  pay 
them  and  the  expenses  of  the  receiv- 
ership. Gallagher  v.  Gingrich,  105 
Iowa,  237. 

In  this  case  the  receiver  was  al- 
lowed poundage  though  his  report 
had  been  delayed  at  the  request  of 
the  parties.  Purcell  v.  Woodley,  10 
Ir.  Eq.  Rep.  422. 

A  receiver  of  a  corporation  is  en- 
titled to  compensation  for  his  serv- 
ices rendered  after  the  revocation  of 
his  appointment,  where  he  has  no  of- 
ficial notice  of  such  revocation. 
New  Birmingham  Iron  d  Land  Co. 
V.  Blevins  (Tex.  Civ.  App.)  40  S.  VV. 
829. 

Where  the  object  of  a  consent  is  to 
appoint  a  receiver  over  an  outstand- 
ing estate  the  salary  should  be  fixed 
by  the  consent.  Burke  v.  Burke, 
Flan.  &  K.  89. 

An  allowance  to  a  receiver  of  ho- 
tel property,  being  10  per  cent  of  the 
receipts  of  the  business  and  amount- 
ing to  about  $2,500,  for  his  services 
from  May  to  DeccmlK-r,  during  which 
he  spent  ordinarily  only  his  evenings 


10 


at  the  hotel  and  employed  a  man- 
ager at  $125  or  $150  per  month  and 
under  bond,  will  not  be  disturbed  on 
appeal  after  it  has  been  approved 
by  two  lower  courts,  where  there  is 
testimony  by  hotel  proprietors  that 
$5,000  a  year  was  fair  compensation, 
and  he  had  no  compensation  for  the 
custody  and  responsibility  of  a  large 
amount  of  personal  property,  and 
the  position  was  attended  with  con- 
siderable anxiety,  and  he  retained  it 
apparently  against  his  own  inclina- 
tions, in  compliance  with  the  wishes 
of  the  party  in  interest.  Cake  v, 
Mohun,  164  U.  S.  311,  41  L.  ed.  447. 

A  judgment  creditor  of  a  receiver 
cannot  maintain  an  action  to  compel 
him  to  fix  the  value  of  his  services 
and  pay  the  same  to  such  creditor, 
as  it  is  the  duty  of  the  court  to  fix 
the  compensation  of  the  receiver. 
Hamburger  v.  Darusmont,  3  Ohio  N. 
P.  222. 

Where  the  order  of  the  court  in 
reference  to  a  receiver's  commission 
is  in  its  discretion  it  will  not  be  in- 
terfered with  except  for  abuse. 
Hembree  v.  Dawson,  18  Or.  474. 

The  compensation  of  a  receiver  and 
the  manner  of  payment  should  be 
fixed  in  the  final  decree.  Cutter  v. 
Pollock,  4  N.  D.  205,  25  L.  R.  A.  377. 

A  purchaser  who  allows  the  re- 
ceiver to  continue  in  possession  un- 
til the  title  is  declared  good  is  bound 
to  pay  the  receiver's  fees.  Brown  v. 
Dowdall,  2  Hogan,  198. 

The  purchasers  of  a  railroad  at 
foreclosure  sale  are  not  interested 
to  contest  the  compensation  allowed 
the  receiver  out  of  the  proceeds. 
'Northern  Alabama  R.  Co.  v.  Hop- 
kins, 59  U.  S.  App.  74,  87  Fed.  Rep. 
505,  31  C.  C.  A.  94. 

Compensation  of  receiver  and 
counsel  fees  should  not  be  fixed  ex 
parte  and  without  notice.  Mer- 
chants' Bank  v.  Cryslcr,  32  U.  S. 
App.  187,  07  Fed.  Rep.  388,  14  C.  C. 
A.  444. 

The  only  question  was  a  question 
before  the  jury  as  to  receivers'  fees 
and  the  court  held  that  the  instruc- 
tions were  correct.  Wilkins  v. 
Georgia  Iron  Works,  74  Ga.  532, 
533. 

By  agreement  of  the  parties  one  of 
them  may  become  liable  for  the  pay- 

145 


§  350 


RECEIVERSHIPS— SUPPLEMENT. 


ment  of  the  receiver's  commissions. 
Kelsey  v.  Sargent,  40  Hun,  150. 

An  order  requiring  a  receiver  to 
pay  over  all  funds  in  his  hands,  with- 
out regard  to  his  commissions,  is  un- 
just. Galster  v.  Syracuse  Sav. 
Bank,  29  Ilun,  594. 

The  basis  of  a  receiver's  commis- 
sion should  be  the  same  as  that  of 
trustees  under  a  will,  llolcombc  v. 
Holcomhc,  13  N.  J.  Eq.  415,  417. 

For  question  of  receivers'  compen- 
sation as  between  them  and  trustees 
in  bankruptcy,  see  Ellis  v.  Boston, 
H.  d-  K.  R.  Co.  107  Mass.  1. 

A  receiver  is  entitled  to  poundage 
except  in  cases  of  e.xecutors,  trustees, 
etc.  Bevan  v.  White,  8  Ir.  Eq.  Rep. 
675. 

A  receiver  of  a  building  and  loan 


association  may  be  allowed  a  fee  for 
transferring  shares  upon  the  books- 
of  the  association.  Chapman  v. 
Young,  05  111.  App.  131. 

There  is  no  general  rule  as  to  com- 
pensation of  receivers.  Day  v.  Croft, 
2  Beav.  488. 

The  compensation  is  payable  from 
time  to  time.  Special  Bank  Comrs. 
V.  Franklin  Inst,  for  Sav.  11  R.  1. 
557. 

The  fees  of  a  referee  appointed  to 
report  as  to  the  amount  of  compen- 
sation of  a  receiver  who  has  been  re- 
moved and  who  has  applied  for  pay- 
ment of  his  commission,  must  be 
paid  by  the  latter  if  the  report  is  in 
his  favor.  Atty.  Gen.  v.  Continertr 
tal  L.  Ins.  Co.  27  Hun,  524. 


Page  582. — (a)  Must  he  reasonable. 


Compensation  is  not  determined 
by  the  amount  passing  through  the 
receiver's  hands,  but  must  be  such 
as  would  be  reasonable  for  services 
rendered  by  a  person  competent  to 
perform  the  duties.  Jones  v.  Keen, 
115  ]Mass.  170. 

Compensation  was  held  to  be  rea- 
sonable in  McArthur  v.  Montclair 
R.  Co.  27  N.  J.  Eq.  77. 

Compensation  fixed  by  responsibil- 
ity, skill,  labor,  and  rate  usually  al- 
lowed. Special  Bank  Comrs.  v. 
Franklin  Inst,  for  Sav.  11  R.  I.  557. 

A  report  that  a  receiver's  compen- 
sation is  reasonable,  made  by  a  mas- 
ter and  sustained  by  competent  evi- 
dence, will  not  be  disturbed.  Karn 
V.  Rorer  Iron  Co.  86  Va.  754. 

A  special  order  was  made  that  such 
compensation  should  be  made  a  re- 
ceiver as  the  judge  should  think  rea- 
sonable. Neave  v.  Douglas,  2G  L.  J. 
Ch.  N.  S.  756. 

The  amount  which  the  receiver  of 
a  corporation  would  be  able  to  earn 
at  his  profession  during  the  time 
covered  by  the  receivership  does  not 
necessarily  furnish  a  criterion  for 
determining  the  amount  of  his  com- 
pensation as  receiver ;  but  the 
amount  for  which  another  person 
possessing  equal  qualifications  could 
have  been  employed  to  perform  the 
services  is  ordinarily  a  fair  and  rea- 
146 


sonable  criterion.  United  States 
Nat.  Bank  v.  National  Bank,  6  Okla. 
163. 

An  attorney  of  a  creditor  should 
not  be  appointed  as  the  attorney  of 
a  receiver  of  an  insolvent  estate;  but 
an  attorney  so  appointed  may  receive 
a  reasonable  compensation  for  his 
services,  if  no  objection  to  his  ap- 
pointment was  made  to  him  or  to  the 
court.  Geyser  Min.  Co.  v.  Bank  of 
Salt  Lake,  16  Utah,  163. 

In  fixing  the  compensation  to  be 
allowed  the  receivers  of  an  assigned 
estate  and  their  solicitors,  the  court 
should  determine  from  the  evidence 
how  much  is  usually  paid  to  persons 
possessing  the  requisite  capacity  and 
experience  for  like  services  under 
similar   responsibilities.     Ibid. 

The  court  cannot  determine  what 
is  reasonable  compensation  for  the 
services  of  the  attorney  of  a  receiver, 
in  the  absence  of  evidence  on  that 
subject,  although  it  is  familiar  with 
what  has  actually  been  done  by  him. 
Uammond  v.  Atlee,  15  Tex.  Civ.  App. 
267. 

The  judges  of  the  court  in  passing 
on  the  reasonableness  of  charges  by 
the  receiver  of  an  insolvent  for  coun- 
sel fees  for  himself  and  other  attor- 
nej's  employed  by  him  may  right- 
fully use  their  personal  knowledge  as 
to  what  has  been  done  by  the  attor- 


RECEIVERS'   COMPENSATION. 


§  350 


neys,  and  also  take  into  considera- 
tion the  character  of  legal  services 
theretofore  rendered  by  counsel,  and 
the  amount  already  allowed  on  ac- 
count thereof.  Olson  v.  State  Bank, 
72  Minn.  320. 


What  another  competent  person 
would  have  done  the  work  for  is  not 
proper  evidence  in  fixing  the  com- 
pensation for  receiver.  Cowdrey  v. 
Galveston,  H.  &  H.  R.  Co.  1  Woods, 
331. 


Page  586. — (c)  Sometimes  a  salary. 


A  receiver  who  was  placed  upon 
the  pay  roll  at  a  monthly  sum  as  an 
allowance  upon  his  compensation  as 
receiver  should  be  allowed  such 
monthly  sum  after  the  sale  of  the 
railroad  for  which  he  was  appointed 
and  the  payment  of  a  sum  as  a  com- 
promise for  his  services,  where  none 
of  the  parties  interested  moved  to 
reduce  such  allowance  or  discharge 
such  receiver,  and  he  was  allowed  to 


go  on  as  such,  with  all  the  responsi- 
bilities attached  to  the  position  and 
to  the  business  in  hand,  and  his  ac- 
count had  been  filed  and  stood,  pre- 
sumably approved  by  the  court,  up 
to  within  two  years  of  the  time  when 
the  question  was  raised,  although 
within  such  two  years  objection  was 
made  and  overruled.  Dillinghani  v. 
Moran,  52  U.  S.  App.  425,  81  Fed. 
Rep.  759,  26  C.  C.  A.  596. 


Page  587. — (d)     WTien  compensation  refused. 


A  receiver  is  not  entitled  to  com- 
pensation for  the  collection  and  dis- 
bursement of  the  government  tax  on 
■whisky  which  belongs  to  third  par- 
ties. White  V.  Allen,  10  Ky.  L.  Rep. 
1025. 

Fees  of  trustees  will  not  be  al- 
lowed from  a  trust  fund  when  they 
are  extravagant.  Trustees  v.  Green- 
ough,  105  U.  S.  527,  sub  nom.  Inter- 
nal Improvement  Fund  v.  Green- 
ough,  26  L.  ed.  1157. 

The  compensation  of  a  receiver, 
and  expenses  incurred  during  the  re- 
ceivership other  than  those  which 
would  necessarily  have  been  incurred 
had  no  receiver  been  appointed,  can- 
not be  allowed  out  of  the  funds  in 
his  hands,  where  his  appointment 
has  been  revoked,  but  they  constitute 
charges  against  the  parties  procur- 
ing his  appointment.  Ogden  City 
V.  Bear  Lake  &  R.  W.  &  I.  Co.  18 
Utah,  279. 

As  to  when  defendants  were  re- 
quired to  pay  the  compensation  of 
the  receiver — see  Hayes  v.  Ferguson, 
16  Lea,  1. 

Compensation  may  be  denied  to 
the  receiver  of  a  corporation  where 
he  has  kept  no  proper  accounts,  and 
has  put  the  court  to  a  groat  deal  of 
trouble  in  determining  his  rights,  or 


has  negligently  or  wilfully  misman- 
aged the  estate.  United  States  Nat. 
Bank  v.  National  Bank,  6  Okla,.  163. 

While  a  receiver's  right  to  com- 
pensation and  allowance  for  ex- 
penses does  not  depend  upon  the  cor- 
rectness of  the  order  of  appointment, 
nevertheless  he  is  not  entitled  to 
compensation  out  of  the  fund  or 
property  received  by  him  under  such 
order,  where  its  enforcement  has 
been  subjected  to  the  check^  of  a  writ 
of  prohibition  on  the  ground  that  it 
was  unauthorized  on  making  return 
to  such  writ,  but  is  only  entitled 
thereto  on  his  accounting  with  the 
court  in  the  suit  wherein  he  was  ap- 
pointed. St.  Louis,  K.  d  S.  R.  Co. 
v.  Wear,  135  Mo.  230,  sub  nom.  State 
St.  Louis,  K.  &  S.  R.  Co.,  v.  Wear, 
33  L.  R.  A.  341. 

A  partner  appointed  receiver  is 
not  entitled  to  compensation.  Berry 
V.  Jones,  11  Ileisk.  206. 

A  receiver  is  not  entitled  to  com- 
pensation for  attending  a  survey  of 
minor's  estate,  no  order  being  ob- 
tained.    Re  Ormsby,  1  Ikill  &  15.  189. 

Full  comi)ensation  is  not  allowed 
a  second  receiver  for  funds  collected 
by  tlie  first  receiver  and  turned  over. 
Atti/.  Gen.  v.  Continental  L.  Ins.  Co. 
32  Hun.  223. 

147 


§  350  EECEIVEllSHIPS— SUPPLEMENT. 

Page  587. — (e)     When  to  he  ^yaid  Ijy  plaintiff. 


An  order  for  the  appointment  be- 
ing reversed,  the  receiver  was  di- 
rected to  turn  over  to  the  defendant 
all  partnership  property  held  by 
him,  and  the  plaintiff  was  ordered  to 
pay  the  receiver's  compensation. 
Vi^cston  v.  ^VatU,  45  Hun,  219. 

The   fees   of   temporary   receivers 


appointed  ponding  an  action  to  set 
aside  an  alleged  fraudulent  convey- 
ance of  goods  are  properly  chargeable 
to  the  plaintilfs  therein,  where  such 
fees  were  incurred  in  converting 
such  goods  into  cash,  of  which  such 
plaintill's  received  the  benefit.  lioun- 
saville  v.  Lanyston,  9t)  Ga.  117. 


Page  589. — (h)  Additional  allowoMces. 


The  compensation  of  temporary 
receivers  of  corporations,  for  which 
no  specific  provision  is  made  by  stat- 
ute, is  governed  by  N.  Y.  Ck)de  Civ. 
Proc.  §  3320,  providing  that  a  re- 
ceiver, except  as  otherwise  pre- 
scribed by  law,  is  entitled,  in  addi- 
tion to  his  lawful  expenses,  to  such 
commissions,  not  exceeding  5  per 
cent  of  the  sums  received  and  dis- 
bursed by  him,  as  the  court  by  which 
he  is  appointed  allows.  Re  ^Yarren 
E.  Smith  Co.  31  App.  Div.  39. 

The  receiver  of  an  insolvent  bank 
is  entitled  to  credit  for  a  charge  of 
$600  made  by  a  surety  company  for 
becoming  the  surety  on  his  bond  for 
$80,000,     under    Wis.     Laws     1893, 


chap.  19G,  authorizing  the  execution 
of  a  bond  by  such  a  company  as 
surety,  and  Wis.  Laws  1895,  chap. 
219,  expressly  authorizing  a  reason- 
able charge  therefor  not  exceeding  2 
per  cent.  Eamacker  v.  Commercial 
Bank,  95  Wis.  359. 

The  objection  that  a  receiver  had 
no  standing  in  court  to  oppose  a  mo- 
tion vacating  his  appointment,  or  to 
make  a  motion  to  vacate  the  leaAe 
granted  another  to  sue  him,  is  not 
available  for  the  purpose  of  defeating 
his  right  to  an  allowance  for  services 
on  such  motions,  where  the  court  per- 
mitted him  to  be  heard  and  recog- 
nized him  on  the  motions.  Hardt 
v.  Levy,  20  App.  Div.  400. 


Page  590. — (i)  Statutory  compensation. 


The  compensation  of  a  temporary 
receiver  appointed  under  N.  Y.  Code 
Civ.  Proc.  §  2423.  is  not  fixed  by  2 
N.  Y.  Rev.  Stat.  p.  470,  tit.  4,  chap. 
8,  §  76,  which  by  N.  Y.  Laws  1880, 
chap.  245,  was  made  applicable  to 
receivers  appointed  under  N.  Y.  Code 
Civ.  Proc.  §  2429,  which  relates  to 
permanent  receivers  only.  Re  War- 
ren E.  Smith  Co.  31  App.  Div.  39. 

As  to  allowance  of  expenses  and 
various  charges  of  receivers, — see  Re 
Union  Bank,  37  X.  J.  Eq.  420. 

Fees  of  receiver  as  fixed  by  N.  Y. 
Code  Civ.  Proc.  §  3220.  Re  Security 
Life  Ins.  &  Annuity  Co.  31  Hun,  36. 

A  statute  relative  to  the  compen- 
148 


sation  of  receivers  was  held  to  be 
prospective,  in  People,  Ncwcomb, 
V.  McCall,  99  N.  Y.  587. 

A  receiver  is  an  officer  of  the 
court,  and  the  court  has  a  right  to 
fix  his  compensation  irrespective  of 
N.  Y.  Code,  §  244,  subd.  4.  Baldwin 
V.  Eazler,  2  Jones  &  S.  275. 

The  commissions  to  be  allowed  a 
receiver  joined  in  an  action  in  which 
a  decree  was  rendered  setting  aside 
a  general  assignment  for  crt'ditors 
are  not  definitely  fixed  by  statute, 
but  are  left  to  the  discretion  of  the 
court  in  South  Carolina.  Mann  v. 
Poole,  48  S.  C.  154. 


REPORTS,   ACCOUNTS  AND   DISTRIBUTION. 
Page  592,  sec.  355. — Reports  and  accounts. 


§  355 


The  report  must  be  full,  clear,  and 
specific.  Bertie  v.  Abingdon,  8  Beav. 
53. 

Where  a  receiver  makes  default  in 
payment  of  a  balance  due  from  him, 
payment  may  be  enforced  by  com- 
mittal.    Re  Bell,  L.  R.  9  Eq.  172. 

The  order  on  a  receiver's  account 
is  not  appealable.  Colgate  v.  Mich- 
igan L.  8.  R.  Co.  28  Mich.  288. 

On  appeals  respecting  receivers' 
accounts,  it  is  the  practice  in  this 
country  to  entertain  objections  to 
the  amount  of  the  items.  Beytagh 
v.  Concannon,  10  ir.  Eq.  Rep.  351. 

In  matters  pertaining  to  a  receiv- 
er's account  he  is  entitled  to  a  trial 
by  jury  on  questions  of  fact.  Hamm 
V.  J.  Stone  c£  Sons  Live  Stock  Co.  13 
Tex.  Civ.  App.  414. 

The  receiver  is  entitled  to  all  prop- 
er legitimate  and  necessary  outlays 
by  him  made  as  receiver.  Hardt  v. 
Levy,  20  App.  Div.  400. 

It  is  the  duty  of  the  court,  whether 
objections  are  made  by  creditors  or 
not,  to  supervise  and  closely  scruti- 
nize the  account  of  a  receiver  of  an 
insolvent.  Olson  v.  State  Bank,  72 
Minn.  320. 

A  receiver's  account  must  be  filed 
in  court.  People  v.  Knickerhocker 
L.  Ins.  Co.  18  N.  Y.  Week.  Dig.  492; 
Re  Burke,  1  Ball  &  B.  74. 

After  bill  is  dismissed  he  should 
be  compelled  to  account.  Pitt  v. 
Bonner,  5  Sim.  577. 

But  a  person  not  a  party  to  the 
suit  has  no  right  to  compel  him  to 
account.  Colburn  v.  Cooper,  8  Ir. 
Eq.  Rep.  510;  Locke  v.  Ashe,  1  Ho- 
gan,  143. 

Nor  is  he  required  to  unless  it  is 
shown  that  assets  have  come  to  his 
hands.  Lyons  v.  Atlanta  Hill  Gold 
Min.  d  Mill.  Co.  38  N.  Y.  S.  R.  892, 
14  N.  Y.  Supp.  533. 

In  passing  upon  his  accounts  the 
court  may  consider  general  prinoi- 
ples  upon  whicii  the  master  has  pro- 
ceeded in  taking  the  account,  but  not 
the  items.  Shewcll  v.  Jones,  2  Sim. 
&  Stu.  170. 

His  accounts  should  be  presented 


at  least  once  a  year.     Lowe  x.  Lowe, 
1  Tenn.  Ch.  515. 

At  least  where  they  are  large. 
Day  V.  Croft,  6  Eng.  L.  in  Eq.  62. 

A  judge  in  passing  upon  the  ac- 
counts of  the  receiver  of  a  corpora- 
tion is  not  bound  by  the  approval  of 
his  expenditures  by  the  judge  ap- 
pointing him,  even  if  such  judge  was 
a  wholly  disinterested  person  and 
otherwise  qualified  to  act  in  the 
premises,  where  such  expenditures 
were  unnecessary  and  unreasonable. 
United  States  Nat.  Bank  v.  Nation- 
al Bank,  6  Okla.  163. 

The  burden  is  on  the  receiver  to 
show  the  correctness  of  his  accounts. 
Ibid. 

Before  a  receiver  is  discharged  he 
should  pass  his  accounts  and  provi- 
sion be  made  for  his  compensation; 
and  if  it  has  been  done  by  agreement 
of  parties  the  order  may  be  set  aside 
on  application  of  the  receiver.  Hoff- 
man V.  Bank  of  Minot,  4  N.  D.  473. 

A  final  order  by  the  district  court, 
allowing  the  account  of  a  receiver, 
and  directing  the  payment  of  a  spe- 
cific sum  for  services  rendered  in  con- 
nection with  the  receivership,  is  not 
within  N.  D.  Rev.  Codes,  §  5499,  pro- 
viding that  "mutual  final  judgments 
may  be  set  off  pro  tanto."  Patter- 
son V.  Ward,  8  N.  D.  87. 

A  final  order  allowing  the  account 
of  a  receiver,  and  directing  the  pay- 
ment of  a  specific  sum  to  one  who 
has  rendered  services  connected  with 
the  receivership,  creates  a  demand 
against  the  receiver  in  favor  of  the 
claimant,  which  is  free  from  equities 
in  favor  of  a  judgment  creditor  of 
the  claimant,  and  ends  the  jurisdic- 
tion of  the  court  over  such  chiim 
furtluT  tlian  to  require  the  payment 
of  tlie  amount  allowed  to  the  party 
to  whom  it  is  due.     Ibid. 

Rents  are  enforceable  by  suit  on 
a  bond  given  in  lieu  of  the  appoint- 
ment of  a  receiver,  and  not  on  motion 
to  compel  the  obligor  to  account  aa 
ii  receiver,  to  wiiicli  position  he  waa 
sul)se(|uently  a|)|)oint<'d.  Baker  v. 
Baker,  36  App.  Div.  485. 

149 


§  355-357  RECEIVERSHIPS— SUPPLEMENT. 

Page  593. — (b)  Reference  to  master. 


Accounts  of  a  receiver,  if  not  as- 
sented to,  should  be  referred  to  a 
master.  American  Trust  &  Sav. 
Bank  v.  Frankenthal,  55  111.  App. 
400. 

If  the  master  adopts  an  erroneous 
principal  in  the  matter  of  a  receiv- 
er's account,  it  may  be  referred  back 
for  correction.  Cowdrey  v.  Galves- 
ton, H.  &  II.  11.  Go.  1  Woods,  331. 

The  report  of  a  master  on  a  receiv- 
er's account  requires  confirmation. 
Richards  v.  Morris  Canal  &  Bkg.  Go. 
4  N.  J.  Eq.  428. 


If  the  report  of  the  master  is  not 
satisfactory  it  should  be  excepted  to. 
Mechanics'  Bank  v.  Bank  of  New 
Brunsivick,  3  N.  J.  Eq.  437;  Wool- 
sey  V.  Gummings  Car  Works,  33  N. 
J.  Eq.  432. 

Exceptions  to  the  master's  report 
on  a  receiver's  accounts  must  first 
be  made  before  the  master.  Cow- 
drey V.  Galveston^  H.  d  H.  R.  Co.  1 
Woods,  331,     . 


Page  594,  sec.  357. — Distribution. 


Money  paid  by  tenants  before  an 
extending  order  belongs  to  the  first 
petitioner.  O'Callaghan  v.  O'Cal- 
laghan,  3  Ir.  Ch.  Rep.  376. 

Rents  collected  prior  to  extension 
belong  to  the  first  plaintiff.  Agra 
&  Mastcrman's  Bank  v.  Barry,  Ir. 
Rep.  3  Eq.  443. 

Rents  must  be  applied  according 
to  the  legal  rights  of  the  parties. 
Corbet  v.  Mahon,  2  Jones  &  L.  071. 

Rents  collected  should  be  applied 
to  the  satisfaction  of  liens.  Pepper 
v.  Shepherd,  4  Mackey,  269. 

Application  of  rents  to  discharge 
of  liens.  Milhous  v.  Dunham,  78 
Ala.  48,  59. 

An  attachment  execution  against 
a  corporation  in  the  hands  of  a  re- 
ceiver is  properly  served  upon  him, 
and  when  so  served  the  plaintiff  in 
attachment  becomes  entitled  to  the 
dividend  in  the  receiver's  hands  when 
declared.  Merchant's  Nat.  Bank  v. 
Binder,  6  Pa.  Dist.  R.  033. 

A  prior  mortgagee  who  is  code- 
fendant  in  a  proceeding  to  foreclose  a 
junior  mortgage  is  entitled  to  rents 
where  he  has  taken  an  assignment 
thereof.  Harris  v.  Taylor,  35  App. 
Div.  402. 

A  judgment  creditor   who   files   a 


bill  in  aid  of  his  execution,  to  remove 
a  prior  mortgage  as  a  cloud  upon  his 
title,  is  not  entitled  to  the  rents  col- 
lected by  a  receiver  appointed  at  his 
instance  pending  the  action,  if  the 
mortgage  is  valid,  the  mortgagors 
are  insolvent,  the  property  insuffi- 
cient security,  and  the  receiver  was 
appointed  for  the  benefit  of  all  the 
parties  to  the  suit,  and  not  for 
his  benefit  alone.  Cross  v.  Will 
County  Nat.  Bank,  177  111.  33. 

Rents  may  be  applied  on  taxes, 
insurance,  and  repairs.  American 
Nat.  Bank  v.  Northwestern  Mut.  L. 
Ins.  Co.  89  Fed.  Rep.  610,  32  C.  C. 
A.  275. 

Rents  may  be  applied  on  taxes 
where  there  is  a  deficiency.  Elliott 
V.  Magnus,  74  111.  App.  436. 

A  receiver  will  not  be  allowed  for 
rents  paid  by  him  which  the  pur- 
chaser should  have  paid.  French  v. 
Pittsburgh  Vehicle  &  Harness  Co. 
184  Pa.  161. 

The  receiver  of  rents  in  an  action 
to  foreclose  a  junior  mortgage  should 
not  be  allowed  to  pay  the  rents  to  the 
plaintiff  until  it  appears  that  there 
is  a  deficiency  upon  the  sale  of  the 
premises.  Harris  v.  Taylor,  22  App. 
Div.  109. 


Page  601,  sec.  370. — Practice  and  pleading. 


The  proper  remedy  by  a  party 
claiming  to  have  a  paramount  inter- 
est as  a  cestui  que  trust  in  a  fund  re- 
covered by  a  receiver  of  a  corporation, 
150 


in  case  he  disputes  the  propriety  of 
a  deduction  for  services  made  by  the 
receiver's  attorney  before  turning 
over  the  fund  to  the  receiver,  is  an 


PRACTICE  AND   PLEADING. 


§  373 


application  to  the  court  for  an  order 
on  the  receiver  to  sue  the  attorney 
for  the  money  withheld  by  him,  and 
not  a  petition  to  compel  the  receiver 
to  account  for  the  amount  improper- 
ly withheld  by  the  attorney, — in  the 
absence  of  collusion  between  the  re- 
ceiver and  attorney.  Johnson  v. 
Johnson  Railroad  Signal  Co.  57  N. 
J.  Eq.  79. 

Claims  for  amounts  received  by  a 
court  receiver  in  chancery  causes 
should,  in  an  action  against  the  es- 


tate of  such  receiver  and  the  sureties 
on  his  bond,  be  preferred  in  the 
names  of  those  beneficially  entitled 
to  the  fundj  or  the  parties  may  go 
into  the  several  chancery  causes  and 
have  the  accounts  settled  and  a  re- 
ceiver appointed  to  collect  the  bal- 
ance ascertained  to  be  due,  notwith- 
standing a  great  lapse  of  time;  and 
they  should  not  be  audited  simply  in 
the  name  of  the  causes  in  which  he 
was  appointed  receiver.  Williams  v. 
Newman,  93  Va.  719. 


Page  603,  sec.  373. — Parties;  allegations. 


In  an  action  by  a  receiver  to  set 
aside  an  assignment  of  a  chose  in 
action  by  a  judgi/ient  debtor  the  lat- 
ter is  a  necessajy  party.  Miller  v. 
Hall,  70  N.  Y.  250. 

The  first  mortgagee  is  a  proper 
party  where  a  recgiver  is  prayed  for. 
Miltenberger  v.  Logansport  R.  Co. 
106  U.  S.  286,  27  L.  ed.  117. 

The  receiver  of  an  insolvent  rail- 
road company  in  possession  of  its 
assets  and  exercising  its  franchises 
is  a  necessary  party  in  a  proceeding 
by  the  state  to  restrain  the  further 
exercise  of  its  franchises.  Re  George 
Mathers'  Sons'  Co.  52  N.  J.  Eq.  607. 

In  a  suit  against  the  fraudulent 
associates  of  a  corporation  the  re- 
ceiver of  the  corporation  is  not  a 
necessary  party.  Wheeler  v.  Clinton 
Canal  Bank,  Harr.  Ch.   (Mich.)   449. 

A  receiver  appointed  to  take 
charge  of  mortgaged  property  in  a 
proceeding  between  parties  is  not  a 
necessary  party  in  a  proceeding  to 
foreclose  a  mortgage  on  the  same 
property,  subsequently  commenced. 
Heffron  v.  Gage,  149  111.  182. 

The  receiver  of  a  railroad  company 
is  not  a  necessary  party  to  an  action 
against  the  company  on  a  note  ex- 
ecuted by  it.  Dullnig  v.  Weekes,  16 
Tex.  Civ.  App.  1. 

An  insolvent  corporation  is  not  a 
necessary  party  to  an  action  by  the 
temporary  receiver  thereof  to  recover 
money  collected  under  a  judgment 
confessed  by  the  corporation  for  the 
purpose  of  giving  the  judgment  cred- 
itor an  unlawful  preference,  \ealis 
v.  American  Tube  d-  Iron  Co.  150  N. 
Y.  42. 


The  receiver  of  a  bank  is  a  neces- 
sary party  in  a  proceeding  in  error 
to  reverse  a  judgment  in  favor  of  the 
bank  against  an  interpleader  seeking 
to  recover  property  from  the  receiv- 
er. Mosler  v.  State  Bank,  6  Kan. 
App.  172. 

A  person  not  a  party,  claiming 
property  in  the  hands  of  a  receiver, 
must  intervene  in  the  suit  in  which 
the  receiver  is  appointed.  Potter  v. 
Spa  Spring  Brick  Co.  47  N.  J.  Eq. 
442. 

The  receiver  is  a  proper  party  in 
an  action  for  an  injury  from  an  as- 
sault by  an  agent  of  such  receiver 
while  acting  for  himself  and  the  re- 
ceiver. Casey  v.  Oakes,  17  Wash. 
409,  Reversing  on  Rehearing  15 
Wash.  450. 

And  as  such  he  is  entitled  to  all 
the  constitutional  rights  guaranteed 
to  any  other  party.  Hamm  v.  J. 
Stone  &  Sons  Live  Stock  Co.  13  Tex. 
Civ.  App.  414. 

But  a  receiver  against  whom  judg- 
ment has  been  taken  is  not  a  neces- 
sary party  to  an  action  on  the  re- 
ceiver's bond.  Black  v.  Gentery, 
119  N.  C.  502. 

And  the  receivers  of  a  railroad 
company  are  not  necessary  parties 
to  a  suit  brought  against  it  after  the 
receivership  is  virtually  closed  and 
the  property  has  been  restored  to  the 
company  and  is  operated  by  it.  San 
Antonio  &  A.  P.  R.  Co.  v.  Barnctt 
(Tex.  Civ.  App.)  44  S.  W.  20. 

A  certain  averment  in  a  suit  on  a 
receiver's  bond  held  siillicient.  Ucx 
V.  Lifhrcll,  1  Dru.  &  W.  2(i. 

Where  suit  is  by  the  receiver  in  bo- 

151 


§382 


EECEIVERSHIPS— SUPPLEMENT. 


half  of  creditors  the  pleadings  must 
set  forth  facts  entitling  each  credi- 
tor to  maintain  the  action.  Fouche 
V.  Brower,  74  Ga.  251,  204. 

A  receiver's  petition  in  an  action 
by  a  receiver  must  set  out  facts 
showing  his  appointment,  and  by 
what  jurisdiction  he  was  appointed, 
and  so  much  of  the  proceedings  as  to 
show  that  his  appointment  was  legal. 
Rhorer  v.  Middleshoro  Town  &  Lands 
Co.  19  Ivy.  L.  Rep.  1788. 

It  is  not  necessary  to  allege  that 
the  debtor  has  no  other  property, 
where  it  is  alleged  that  he  is  in  fail- 
ing circumstances  and  has  more 
judgments  against  him  than  he  can 
pay.  Whitehouse  v.  Point  Defiance, 
T.  &  E.  R.  Co.  9  Wash.  558. 

An  action  by  a  receiver  against 
directors,  where  it  does  not  appear 
that  they  were  severally  liable,  and 
which  is  not  for  accounting,  will  be 
regarded  as  an  action  at  law,  and 
may  be  demurrable  for  misjoinder. 
O'Brien  v.  Fitzgerald,  143  N.  Y.  377. 

In  an  action  by  a  receiver^  aver- 
ments that  on  a  certain  date  by  or- 
der of  court  in  a  certain  suit  against 
his  insolvent  he  was  appointed  re- 
ceiver  of    the   insolvent's   property, 


with  the  right  to  take  possession  of, 
sue  for,  and  demand  the  same,  are 
sufficient.  Daggett  v.  Gray  (Cal.) 
40  Pac.  959. 

The  prayers  of  a  petition  for  the 
granting  of  an  injunction  and  the 
appointment  of  a  receiver  are  prop- 
erly denied  where  the  allegations  of 
the  petition  do  not  make  out  a  case 
either  for  an  injunction  or  for  a  re- 
ceiver. Short  V.  Melton,  103  Ga. 
567. 

When,  upon  decree  pro  eonfesso 
in  foreclosure,  the  plaintiff  asks  for 
a  receiver,  he  must  show  by  affidavit 
the  amount  due  for  princiipal,  inter- 
est, and  costs,  a  statement  in  the  bill 
is  insufficient.  Rogers  v.  Newton,  2 
Ir.  Eq.  Rep.  40. 

A  denial  that  a  receiver  was  prop- 
erly appointed  is  not  sufficient; 
facts  must  be  stated.  Goodhue  v. 
Daniels,  54  lowa^  19. 

Verification. 

Where  the  petition  and  answer  are 
not  verified  in  positive  terms,  and 
there  is  no  evidence  offered,  the  court 
should  refuse  an  appointment.  New 
South  Bldg.  &  L.  Asso.  v.  Willing- 
ham,  93  Ga.  218. 


Page  607,  sec.  382. — Scope  of  order. 


Practice  under  N.  Y.  Code,  §  298, 
requiring  an  order  of  appointment 
to  be  filed  and  recorded,  and  also  cer- 
tified copy,  etc., — considered  and  de- 
termined. Fredericks  v.  Niver,  28 
Hun,  417;  Scroggs  v.  Palmer,  66 
Barb.  505. 

Other  property  belonging  to  de- 
fendant against  whom  a  judgment 
has  been  rendered  requiring  him  to 
discharge  a  specified  indebtedness 
within  a  given  time,  and  that  in  de- 
fault thereof  specified  land  shall  be 
sold  and  the  proceeds  applied  in  pay- 
ment of  the  indebtedness,  cannot  be 
included  in  an  order  appointing  a 
receiver  on  an  application  made  aft- 
er the  rendition  of  the  judgment. 
Kr cling  v.  Kr cling,  118  Cal.  421. 

An  order  allowing  an  ex  parte  in- 
junction in  attachment  proceedings 
without  the  filing  of  the  bond  re- 
quired by  2  How.  (Mich.)  Stat.  § 
153 


0687,  and  an  order  appointing  a  re- 
ceiver of  the  property,  are  void. 
Lawton  v.  Richardson,  115  Mich.  12. 

A  substitution  of  receivers  of  an 
insolvent  bank  cannot  be  eflFected 
under  the  guise  of  a  resettlement 
of  an  order  which  properly  expressed 
the  decision  of  the  court  as  made  .at 
the  time  it  was  granted.  People  v. 
Murray  Hill  Bank,  10  App.  Div.  328. 

Parties  cannot  stipulate  away  the 
order  of  appointment.  It  is  beyond 
their  control.  People  v.  Globe  Mut. 
L.  Ins.  Co.  57  How.  Pr.  482. 

An  order  appointing  a  receiver 
may  be  admitted  as  testimony,  but 
may  be  defeated  by  the  instructions 
of  the  court  as  to  its  object.  A  re- 
ceiver appointed  by  a  master  in 
chancery  may  defend  his  action  in 
suit  for  trespass.  Brush  v.  Blanch- 
ard,  19  111.  31. 

When  the  complaint  does  not  al- 


PRACTICE  AND  PLEADING. 


§§  384,  396,  399 


lege  the  facts  constituting  the  neces- 
sity for  the  immediate  appointment, 
an  order  appointing  a  receiver  with- 
out notice  is  erroneous.  Bank  of 
Florence  v.  United  States  8av.  &  L. 
Co.  104  Ala.  297. 


The  order  should  embrace  a  find- 
ing as  to  facts  justifying  appoint- 
ment. Morey  v.  Grant,  48  Mich. 
326. 


Page  607,  sec.  384.— Affidavits. 


Affidavits  may  accompany  the  pe- 
tition in  an  action  by  partners, 
which  ask  for  the  appointment  of  a 
receiver,  under  Tex.  Rev.  Stat.  1895, 
art.  1465,  and  may  be  read  in  sup- 
port of  its  allegations,  but  they  can- 
not serve  as  pleadings  in  the  case  or 
enlarge  upon  the  case  made  by  the 
petition.  We66  v.  Allen,  15  Tex. 
Civ.  App.  605. 

Al>atement. 

The  appointment  of  a  receiver  in 
one  action  for  a  fund  to  be  collected 
by  a  city  from  drainage  assessments 
does  not  abate  other  actions  then 
pending  against  the  city  to  compel 
payment  of  claims  to  which  the 
money  in  such  funds  is  applicable. 
Wilder  v.  'New  Orleans,  58  U.  S.  App. 
109,  87  Fed.  Eep.  843,  31  C.  C.  A. 
249. 

Appeal. 

An  insurance  company  which  ap- 
pears on  the  rule  to  show  cause  why 
the  receiver  should  not  be  appointed 
to  collect  certain  policies,  and  makes 
no  objection  to  the  appointment,  can- 
not claim  on  appeal  that  such  ap- 
pointment was  error.  New  York  L. 
Ins.  Co.  V.  Davis,  94  Va.  427. 


Suit  in  tar. 

A  judgment  in  favor  of  receivers 
of  a  bank  in  one  state  is  a  bar  to  a 
suit  by  the  receivers  in  the  name  of 
the  bank  on  the  same  cause  of  action 
in  another  state.  Bank  of  North 
America  v.  Wheeler,  28  Conn.  433, 
73  Am.  Dec.  683. 

Attacking  judgment. 

An  intervention  by  a  debtor  in  a 
judgment  in  favor  of  a  receiver,  in  an 
application  by  the  attorney  of  the 
receiver  to  have  the  attorney's  fees 
fixed  and  allowed,  whereby  such  debt- 
or seeks  to  reduce  the  judgment  by 
one  half  of  the  attorney's  fees  in- 
cluded therein,  which  the  attorney 
had  agreed  to  allow  the  receiver  to 
retain,  is  a  direct  proceeding  within 
the  rule  that  a  judgment  may  be  as- 
sailed in  a  direct  proceeding  for 
fraud  or  accident  preventing  the 
party  from  availing  himself  of  a 
valid  defense  where  the  court  is  the 
same  which  rendered  the  judgment, 
and  has  jurisdiction  of  all  the  par- 
ties interested,  and  control  of  the 
funds.  Hammond  v.  Atlee,  15  Tex. 
Civ.  App.  267. 


Page  615,  sec.  396. — Void  appointment. 


An  erroneous  appointment  does 
not  render  the  consequent  proceed- 
ings void.  Mcllhenny  v.  Binz,  80 
Tex.  1. 

An  order  directing  a  receiver  to 
sell  property  of  a  corporation  is  nec- 
essarily erroneous  whore  he  was  im- 
properly appointed  receiver.  Em- 
pire Hotel  Co.  v.  Main,  98  Ga.  176. 


The  appointment  of  a  receiver  un- 
der a  judgment  which  was  dis- 
charged in  bankruptcy  is  void.  Gib- 
son v.  Gorman,  44  N.  J.  L.  325. 

An  insolvent  estate  is  not  liable 
for  money  loaned  by  one  acting  as 
its  receiver  under  a  void  appoint- 
ment. Ludington  v.  Thompson,  4 
App.  Div.  117. 


Page  618,  sec.  399.— Right  of  set-off. 


The  debts  of  a  bank  in  the  hands 
of  a  receiver  cannot  be  deducted  from 
its  credits  in  the  hands  of  a  receiver, 
in  fixing  the  amount  of  an  assess- 


ment against  the  receiver  under  the 
Washington     revenue     act.     Hewitt 
v.  Traders'  Bank,  18  Wash.  32(). 
A    counterclaim   or    set-ofT   comes 

153 


§  399 


RECEIVERSHIPS— SUPPLEMENT. 


within  the  spirit  of  the  act  of  Con- 
gress of  August  13,  1888,  allowing  a 
receiver  of  a  Federal  court  to  be  sued 
in  a  state  court  without  leave  of  the 
court  appointing  him.  Grant  v. 
Buckncr,  172  U.  S.  232,  43  L.  ed.  430. 

A  claim  for  breach  of  covenants 
of  warranty  may  be  set  off  by  the 
vendee  against  the  receiver  of  the 
vendor,  in  a  suit  for  rent  due  by  the 
vendee  to  the  vendor,  where  the  re- 
ceiver is  merely  a  general  one  to  col- 
lect and  preserve  assets.  Central 
Appalachian  Co.  v.  Buchanan,  90 
Fed.  Rep.  454,  33  C.  C.  A.  598. 

A  depositor  in  an  insolvent  bank 
is  entitled  to  an  equitable  set-off  of 
his  deposit  against  a  note  on  which 
he  is  primarily  liable,  although  the 
note  is  not  due  at  the  time  of  the 
appointment  of  the  receiver  of  the 
bank,  where  he  elects  to  waive  the 
additional  time.  Clute  v.  Warner, 
8  App.  Div.  40. 

Where  receivers  are  representa- 
tives of  the  creditors  of  an  insolvent 
corporation,  and  the  suit  is  against 
the  stockholders,  the  right  of  set-off 
does  not  exist.  Osgood  v.  Ogden,  4 
Keyes,  70. 

A  receiver  is  entitled  to  deduct 
from  money  due  to  a  creditor  any 
sum  paid  to  him  by  mistake.  Peo- 
ple V.  E.  Remington  d  Sons,  60  Hun, 
42. 

Indebtedness    due    from    an    em- 

154 


ployee  may  be  set  off  against  wages 
due  from  a  receiver.  Davis  v.  Stover, 
16  Abb.  N.  S.  225. 

Rights  of  set-off  are  not  affected 
by  the  appointment  of  a  receiver. 
Re  Middle  District  Bank,  1  Paige, 
585. 

Rent  wrongfully  paid  to  a  receiver 
may  be  offset  against  future  rents. 
Gra7it  V.  Buckner,  172  U.  S.  232,  43 
L.  ed.  430. 

For  equitable  set-off  against  funds 
in  the  hands  of  receivers — seeMerrill 
V.  Cape  Ann  Granite  Co.  161  Mass. 
212. 

Debts  of  a  partner  and  his  firm  to 
a  bank  cannot  be  set  off  by  a  bank 
receiver  against  trust  moneys  which 
the  partner  mixed  with  his  own  or 
the  firm's  deposit,  without  the 
bank's  knowledgCj  the  whole  amount 
remaining  until  the  bank  failed. 
Knight  v.  Fisher,  58  Fed.  Rep.  991 ; 
Fisher  v.  Knight,  17  U.  S.  App.  502, 
61  Fed.  Rep.  491,  9  C.  C.  A.  582. 

Depositors  of  a  bank  in  the  hands 
of  a  receiver  have  a  right  of  set-off' 
as  against  the  demands  of  the  receiv- 
er due  from  them  on  notes.  State 
v.  Brobston,  94  Ga.  95. 

Demands  due  a  lessee  before  the  ap- 
pointment cannot  be  set  off  against 
rents  accruing  afterwards.  Farmers* 
Loan  d  T.  Co.  v.  Northern  P.  R.  Co. 
58  Fed.  Rep.  257. 


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